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

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

Links Mentioned in the Episode

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Teaser

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

Introduction

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

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

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

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

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

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

Will You Please Introduce Yourself Further?

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

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

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

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

Cost of Living Expenses

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

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

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

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

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

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

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

Money Mindset in Grad School

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

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

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

Minimizing Recurring Costs

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

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

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

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

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

Retirement Saving and Discretionary Spending

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

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

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

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

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

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

Commercial

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

Spearfishing

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

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

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

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

Self-Sufficiency and Knowing What Makes You Happy

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

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

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

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

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

Sailboat and Seabattical

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

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

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

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

32:33 Michael: Thank you.

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

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

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

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

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

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

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

National Laboratory Postdoc Funding

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

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

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

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

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

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

Financial Independence, Retire Early (FIRE)

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

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

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

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

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

Best Financial Advice for Another Early-Career PhD

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

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

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

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

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

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

Outtro

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

This Grad Student Deferred Her Acceptance to Work on Her Finances

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

Links Mentioned in this Episode

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

Teaser

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

Introduction

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

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

Will You Please Introduce Yourself Further?

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

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

Timing of Grad School Application and Deferment

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

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

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

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

Receiving an Acceptance Letter

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

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

Role of Finances in Decision

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

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

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

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

Informing the Grad Program About Deferment

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

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

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

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

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

What About Funding?

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

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

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

Finances During Gap Years

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

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

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

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

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

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

Commercial

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

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

Web Design Business

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

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

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

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

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

Starting Grad School

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

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

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

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

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

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

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

Financial Transition

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

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

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

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

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

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

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

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

For Whom is Deferring a Good Option?

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

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

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

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

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

32:02 Emily: Sounds great.

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

Best Financial Advice for Another Early-Career PhD

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

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

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

33:24 Brittany: Yeah, Upwork.

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

33:56 Brittany: Thank you for having me!

Outtro

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

Insights from a Financial Planner Who Works with Academics

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In this episode, Emily interviews Andy Baxley, a Certified Financial Planner who specializes in working with academics and PhDs. Andy pursued graduate school in psychology immediately after undergrad, but quickly realized the career path wasn’t right for him and the financial pressures were too great. He eventually started practicing financial planning, realizing that it is psychology ‘out in the wild’, and decided to serve the academic community he so closely identified with. Andy shares his insights from working with PhD clients nearing retirement about what they are glad they did when they were younger and what they wish they did. At the end of the interview, Andy explains how his career plans have brought him back to graduate school again. Andy brings deep insights to the interview from his years of study and practice in this space—ones you won’t want to miss!

Links Mentioned in this Episode

Teaser

00:00 Andy: It was sort of that long-term existential financial dread mixed in with just the day to day, “I don’t have enough money for anything.” I was living in a big, fairly expensive city and just was very, very much living like the proverbial graduate student. I didn’t mind that, but it was that in tandem with feeling like everyone else was just taking like leaps and bounds beyond where I was in their financial journeys, that confluence of things added a lot of anxiety.

Introduction

00:34 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 17 and today my guest is Andy Baxley, a certified financial planner who specializes in working with academics and PhDs. Andy pursued graduate school in psychology immediately after undergrad, but quickly realized the career path wasn’t right for him, and the financial pressures were too great. He eventually started practicing financial planning, realizing that it is psychology out in the wild and decided to serve the academic community he so closely identified with. Andy shares his insights from working with PhD clients nearing retirement, about what they are glad they did when they were young and what they wish they had done. At the end of the interview and explains how his career plans have brought him back to graduate school. Again, don’t miss Andy’s deep insights from his years of study and practice in this space.

01:36 Emily: I have my own insights that I will provide to you next week, specifically regarding the home buying process. My husband and I closed on our very first home a week ago. My podcast episode next week is going to be all about our journey to home-ownership. Like many other PhDs and millennials generally, we put off buying our first home for quite a while. I’ve been open on the podcast about my regret that we did not buy our first home back when we were in grad school and I’m pretty bullish on grad students and PhDs buying homes if it’s financially feasible.

02:10 Emily: To that end, I’m publishing the episode next week on our personal home-ownership journey, which I hope you’ll listen to. I’ve also scheduled a special event with my brother, Sam Hogan, who is a mortgage originator specializing in grad students and PhDs. You’ve heard Sam on the podcast previously in season eight, episode four; season five, episode 17; and season two, episode five. We are going to do an AMA style live call over zoom on Thursday, May 6th, 2021 at 5:00 PM PDT 8:00 PM EDT. We will do our best to answer any question you have about buying a home, especially as a grad student or PhD. You can register for the event and my mailing list at pfforphds.com/mortgage. I hope you will join us.

Book Giveaway

02:56 Emily: Now it’s time for the book giveaway contest. In April, 2021, I’m giving away one copy of Walden on Wheels by Ken Ilgunas, which is the Personal Finance for PhDs Community book club selection for June, 2021. Everyone who enters the contest during April will have a chance to win a copy of this book. Walden on Wheels made a splash when it was published, because the author wrote about how while he was a graduate student at Duke, he lived in a van on campus instead of renting a home so that he could avoid taking out student loans. This was an even more counter-cultural move than it appears to be now because it was before the rise of hashtag van life. I’m looking forward to learning more about the author’s motivation to make such an extreme choice and discussing it with the members of the Personal Finance for PhDs community. 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@emilyatpfforphds.com. I’ll choose a winner at the end of April from all the entries. You can find full instructions at pfforphds.com/podcast. Without further ado, here’s my interview with Andy Baxley.

First Go at Grad School

05:12 Emily: Yeah. And we’re going to get ton of that insight later on. I’m so excited for it. But first we want to go back in your own history back to when you were pursuing your own PhD the first time, so could you please tell us about the graduate program that you entered and what you were studying?

05:30 Andy: Yeah, absolutely. It’s funny, when I look back on my own personal history, I would have been really surprised 10 years ago, if I could have gotten in a time machine and seen where I am today, I don’t think I ever would have guessed that I ended up exactly where I am, but I also wouldn’t have guessed that I’d be as professionally fulfilled as I am either. It turned out well, but definitely a number of unexpected turns along the way. To go way back, I think the best place to start this story is probably in high school. I was a really sort of uninspired student in high schoo,l to say the least, and my parents always said, you have to get a 3.0 at minimum, so I always got like exactly a 3.0, I just didn’t really have much direction or passion.

06:15 Andy: All that kind of changed when I got about halfway through college and I just got very inspired by a couple of professors and started doing research assistantships and teaching assistantships in my undergraduate work and ultimately decided to pursue becoming a professor myself in psychology. The second half of my academic career, I think I was an excellent student and that was the first time I’d ever been excellent at anything. I really was just very excited to be good at something. I started thinking about life after undergraduate work and ultimately went to a master’s program, that was well-known for being a feeder into really good PhD programs, and so I thought that was the path. It didn’t end up working out that way, and I can tell you more about that story certainly.

What Drove the Decision to Leave Grad School

07:07 Emily: Yes, please do. I mean, I think we all know the beginning of this path, but where your story gets interesting is when you start to deviate from it. So why did you end up leaving that master’s program?

07:17 Andy: It was a mix of things, it was definitely a confluence of things. First and foremost, I think I got there and I realized that while I was fully funded in the program and I had a stipend, I sort of looked around and I realized that I didn’t have the same sense of purpose or direction that a lot of the other students in the program did. At first it didn’t seem like that big of a deal, but the more I thought about it, the more I realized that the further on I got in that journey, the competition was only going to get fiercer and fiercer. I sort of had this mindset that as long as I can do the next thing, that’s where I’ll find happiness. If I can just get into this master’s program, then my path is paved and I’ll find happiness and all will be well.

08:05 Andy: Then I was like, well, that’s obviously not true and I was thinking, okay, well maybe if I get into a great PhD program, once I do that, all will be well and my life will be pretty much set at that point. And I kept talking to people who were either one step or two steps or three steps along in the journey and realizing that some of them are happy, but a lot of them were under a tremendous amount of pressure financially. They just had a lot of stress in their lives that I wouldn’t have expected, and that wasn’t just true. One or two steps beyond. The more people I talked to, I realized that even all the way up to tenured faculty, those folks were under a lot of pressure as well. Some folks were extremely happy with their lives, but not all of them were and I just realized that I wasn’t on a path to sure happiness or professional fulfillment.

08:52 Andy: Also, I was going up against people who were really super passionate about the research topics that they were focused on and I just didn’t have that. All I had was that I was really excited to be good at something and excited to be a good student, but I just didn’t have that passion and didn’t have that drive. Those were sort of the personal reasons. And then there were certain financial ones as well, which I’m certainly happy to go into.

09:15 Emily: Let’s do that in a moment. I am really impressed with you as a, whatever you were 22, 23 year old person, really being able to kind of take a step back from the day-to-day rush and rigor of the program and evaluate “is this really where I want to go” and to do that, looking ahead to your older people ahead of you in the program and older mentors and so forth and asking yourself if you really want that out of your life. And to do that so early on, right within the first, it sounds like about a year of that program doing that evaluation. I really encourage the listeners to periodically step back and reevaluate and see if the path that you’re on is really the one you went to beyond because bailing out like you did earlier is much, much less sunk cost, than getting to the end of the PhD and realizing that you don’t want the career that’s on the other side of that PhD, the one that you thought you wanted. I really commend you for that. Can you talk a little bit more please about the financial pressures that you were experiencing and observing?

10:13 Andy: Absolutely. And one thing I’ll add to what you just said as well, is that that was the hardest decision I’ve ever made to leave that program. It felt like it felt like my world was crumbling down. So much of my identity was wrapped up in that path that I had chosen for myself. At the time it was truly like crushing at a personal level to make that decision, but looking back, it truly is the best decision that I’ve ever made. That’s not to say of course, that everyone should leave their PhD programs or that everyone should leave graduate school, but it is to say that if you have that hunch, that maybe that’s something worth considering. It may feel like the end of the world in that moment, but it will get better later on as you find your path, it just doesn’t seem like it in the moment.

10:57 Andy: To circle back around to the financial side of things, I think I had this experience that a lot of folks probably do, which is that I was seeing a lot of my peers from college who hadn’t chosen the same path, start to experience some degree of financial success. I always had assumed like, “Oh, financial success isn’t for me like that that’s for other people, that’s, that’s not really a thing for me”. But then I had this weird experience where I started to see other people get jobs and decently paying jobs and I felt a little bit of jealousy there. Also I just felt, my stipend was generous, but it wasn’t quite enough to live on, so I was accumulating more student loan debt on top of what I already had for my undergraduate work.

11:42 Andy: I was by no means into personal finance yet at that point, but I was just doing some very simple math and thinking about when am I actually going to make enough money to start to dig out of this hole? I started playing around with compound interest calculators and realizing how delayed I was going to be, not only in paying off my debt, but also in starting to accumulate assets long-term. It was that long-term existential financial dread mixed in with just the day-to-day “I don’t have enough money for anything”. I was living in a big, fairly expensive city and just was very much living like the proverbial graduate student. I didn’t mind that, but it was that in tandem with feeling like everyone else was just taking like leaps and bounds beyond where I was in their financial journeys, that confluence of things added a lot of anxiety, I think.

12:32 Emily: Yeah. I think what you’re expressing is, again, common enough if people take the moment to think about it. And certainly when you’re actively taking out student loan debt it’s really in your face that this it’s not a long-term sustainable thing to be doing. I think it’s a little harder when you have the stipend and it’s enough to live on, but you don’t quite realize, like when you were playing around the compound interest calculators, you don’t quite realize the long-term effects of not being able to save, not being able to invest, so you can make it day to day, but it’s easier to not think about the long-term. You had the pressure of both the day-to-day and the long-term bearing down on you. I really appreciate those observations.

Life after Leaving Grad School

13:12 Emily: Can you tell us what you did next — after you left your program, after you world crumbled around you? And on that path, how you fell in love with personal finance?

13:22 Andy: Yeah, absolutely. After the program, I spent a couple of months just sort of wallowing in uncertainty and not knowing what I would do. Ultimately what I landed on — I love to travel, so I moved to South Korea and taught English as a second language. I intended to do that for one year, just to sort of get my financial house in order and also have a really neat, unique experience. I actually ended up staying for four just because I really loved it. And I knew that I didn’t want to be — I was teaching anywhere from kindergarten to middle school, depending on which year I was there. I knew I didn’t want to do that forever and I also knew I didn’t want to be a teacher forever necessarily, but I just found the experience kept getting more and more interesting and so it kept me there longer than I thought.

14:07 Andy: Somewhere about halfway through that journey, I picked up a book called Millionaire Teacher by a guy named Andrew Hallam. And first of all, the term “millionaire teacher” seemed like an oxymoron to me, which I think is kind of the point of the title. And again, like I said earlier, building wealth, and certainly becoming a millionaire, never felt like something that was for me. It just always felt like that’s that’s for rich people and I just don’t know anything about that. I sort of always buried my head in the sand and was never a great saver, never even thought about investing. I don’t remember why exactly I read this book, but I started to read this book and realized that actually, if you start early enough and you save even just a bit, and as your earnings increase, if you can save a bit more, there’s a pretty clear path to wealth for a lot of folks. I don’t want to make it seem like it’s, it’s available to everyone because I think we have systemic structural issues that do make it really hard to build wealth. But I think it’s, it’s available to a lot more people than most people think. If you can be prudent, especially in your younger years, that there is a path to wealth and, and that wealth isn’t, we can talk more about this certainly, but wealth isn’t just about, how big your accounts are getting, but it’s also about what does that allow you to do. What sorts of freedom does that allow you to pursue? Once I realized number one, that wealth isn’t just for rich people, you know, building wealth isn’t just for people with trust funds, I think I just started reading every book I could possibly find on personal finance and just became sort of obsessed. So that’s how the interest was born in personal finance and then the career part came later.

15:41 Emily: That’s a fantastic entry point into the subject matter. Finding that perfect book that you could see yourself in — The Millionaire Teacher. And I love that you said it’s a provocative title, it’s an oxymoron. I also have a program called the Wealthy PhD, which is similarly designed to be provocative and “What a PhD can be wealthy? How could that possibly be?” Of course, we’ll talk about that in a moment.

Transitioning into a Career as a Financial Planner

16:05 Emily: You’re falling love the subject of personal finance. How did you make it into your career?

16:10 Andy: The first part was the realization that building wealth isn’t just for rich people, but the most important thing was the second realization, which was that personal finances is not just about finance. It’s not just about the numbers. There’s kind of a corny saying that I’ve heard, but I actually like. It’s that personal finance is more personal than it is finance. I started to make this connection. I was also really deeply immersed in the positive psychology movement at that time. I was reading a lot of work by Marty Seligman and other folks who were really just making the statement that it’s not just about fixing our deficiencies, it’s about how do we get from our baseline and transcend beyond that and live a life that is maybe even better than we ever could have expected.

Andy: I started to make this connection that like, “Oh my God, if building wealth is available to everyone, maybe that can also be a tool for helping people, to use another cliche, live their best life.” How can wealth become a tool to live in accordance with our values and live a life filled with joy and fulfillment? And once I made that connection, that personal finance is the best applied psychology there is, it just clicked for me. I was like, Oh my God, I can do this thing professionally that I’ve become really interested in and sort of honor my love of psychology and that original career trajectory I had set for myself. It was like psychology out in the wild. And that was really exciting for me. I didn’t have to just become, I shouldn’t say just, I didn’t have to become a professor. There were other ways to do that. That was really exciting for me. I was hooked at that point and I haven’t really looked back even a single day since then.

17:49 Emily: That’s such a beautiful expression. I’m completely on board with you, but I hope the audience is hearing this as well, the insights that you just gave, because I think it can maybe explain a lot to them about why they haven’t been successful with personal finance in the past. Even if they’re obviously super smart if they’re PhDs or whatever. But like you said, it’s psychology. It’s personal.

Insights into Personal Finance for PhDs

18:09 Emily: So, you get into this as your career, and I know you’ve had a couple of jobs, but what I want to focus on now is what you have learned from and observed in the academic clients you’ve been working with since you did switch to having a focus on that population in your practice. What does the future look like for someone who is maybe currently in graduate school or otherwise early on in their PhD career? What happens a few decades from now, if they are intentional now with their money?

18:40 Andy: Yeah. That’s such a good question because the answers are very different about when you think about the person who’s intentional versus the person who isn’t. To talk about the people who are intentional, there’s this quote I really love by a guy named Morgan Housel, he just came out with a book called the psychology of money and he says “the ability to do what you want when you want with who you want for as long as you want is priceless. It’s the highest dividend money pays.” And so what comes later down the road for folks who are really intentional and diligent about their personal finances early on is freedom. I guess that’s just the best way to put it. And that can be intellectual freedom, it can be creative freedom, it can be — the one thing I would add to Morgan’s quote is the ability to be wherever you want to.

19:25 Andy: I think when people are investing and saving, it can feel abstract, but the way I think about it is they’re just saving little units of freedom and flexibility and how they end up using those units of freedom and flexibility later on, we don’t necessarily know that on the front end, but when they get there, they’re so happy to have them. I’ve had clients who spend half of the year abroad in South America. I’ve had clients who retired and started a little boutique motel. I’ve had clients who were able to afford to do sort of part-time work very early on, like in their fifties and do a half retirement, half working thing for a period of time. So truly the limits are non-existent. The possibilities are as big as your creativity. What comes later on, I can’t say specifically what comes for each individual person without knowing them, but I can say that everyone I’ve ever talked to who did a good job saving early on was really glad they did. I’ve never once heard somebody say that they regret it.

20:24 Emily: I really love the way you phrased that of, saving up units of freedom and flexibility for the future. I’ve expressed that before as money gives you options. Whatever you want to do, having money is going to make it easier to accomplish that. But I really like the way you phrase it, because I know that for me earlier on when I was in graduate school and so forth, and I still don’t to a degree, didn’t have a clear picture of what my retirement or my long-term future would really look like. I wasn’t really sure what kind of career I would have. I wasn’t really sure where I’d want to live or. I have children now, but when I didn’t, I didn’t know how big my family would be. There was a lot of uncertainty and I think that’s really common for PhDs because if you stay on that track, like you may end up moving many times, it’s very difficult to tell what your life is going to look like many decades from now. That can make it a little more difficult to save for and get motivated about because if you think about the vision board technique, for example, you are supposed to have like a really crystal clear vision of like what you’re going for. When you’re facing reality about what your career might look like as a PhD, it might be difficult to have that clear vision, but I love the way you phrase that of just whatever it ends up looking like, saving up for your freedom and flexibility now we’ll give you your options later on for living wherever, doing whatever with whoever, everything you just listed from Morgan Housel. I really love the way you phrased that.

Commercial

21:51 Emily: Emily here for a brief interlude. Taxes are weirdly, unexpectedly difficult for funded grad students and fellowship recipients at any level of PhD training. Your university might send you strange tax forms or no tax forms at all. They might not withhold your income tax from your paychecks, even though you owe it. It’s a mess. I’ve created a ton of free resources to assist you with understanding and preparing your 2020 tax return, which are available pfforphds.com/tax. I hope you’ll check them out to ease much of the stress of tax season. If you want to go deeper with the, or have a question for me. Please join one of my tax workshops, which you can find links to from pfforphds.com/tax. It would be my pleasure to help you save time and potentially money this tax season. So don’t hesitate to reach out. Now back to our interview.

Pitfalls to Avoid as an Early-Career PhD, According to a Financial Planner

22:57 Emily: Do you want to talk about the converse side about mistakes that you’ve seen your clients make or pitfalls that younger people earlier on in their career should avoid?

23:08 Andy: Yeah, absolutely. The number one mistake is a pretty obvious one and it’s just not saving. It doesn’t have to be, Oh, I didn’t have a super high savings rate, it’s people who just decided, I’m going to wait until much later to start saving. And the thing about investing and saving is that time is your best friend. A lot of people think Warren Buffet’s secret is that he’s this fantastic investor, but the truth is Warren Buffet’s secret is that he’s a fantastic investor and he’s been investing now for like 80 years or something like that, so he’s had that time for, for compound interest to take effect. I think starting really late is one thing that a lot of folks end up regretting. When I meet clients who are 60 and maybe they didn’t start saving until they were 45 seriously and they’re a bit behind or a lot behind, I think what really rings true for me is that it makes it very clear in meeting with these folks is that money doesn’t buy happiness, certainly, but it does pave the way for you to build happiness and joy and fulfillment over the time.

24:13 Andy: Conversely, a lack of money can make it really hard to achieve those things. When you’re 60 starting to think about retirement, but knowing you don’t have enough money to fund a decent lifestyle in retirement that you can enjoy, that’s a really tough place to be. And that stress really weighs on people, in my experience. I think a piece of advice I would give to younger people sort of like cautionary advice is just we’ve all probably experienced some version of resource scarcity at some point in our life, especially folks who’ve gone through graduate programs where you just feel like it’s really hard to make ends meet. And we know how stressful that is. I guess the pieces of advice I would give to a lot of folks is that that stress is amplified by 50 to a hundred times, if you’re at the end of your career, because you no longer have three or four decades of earning potential in front of you. It can be really scary for folks. That’s one of the things I’m most passionate about when I work with younger clients is these small changes we can make on the front end, end up making these tremendous differences on the back-end.

25:15 Emily: Compound interest truly amplifies your actions from early on, given that timeline that you were talking about. I’m thinking about someone in the audience who — you mentioned earlier, systemic barriers to building wealth that many people experience. Of course, we have a student loan crisis now that did not exist for the people who you’re working with who are nearing their retirement years. I’m thinking about someone in the audience who is really struggling, or maybe they were really struggling until recently and only in their thirties or forties, they’ve finally gotten to a point where they feel like they have a career and they have the paycheck and they can start saving. What can someone who is struggling or has been struggling do to — I know that time is your best friend, but like what can we do to make up if the time has already passed?

26:04 Andy: What I often tell clients who come to me with that question, because I do get clients who are like, honestly, it’s too late for me. What I tell them is certainly the best time to start building wealth is the first paycheck you get. That’s the best time to start doing it. Knowing that the vast majority of people don’t start then, the second best time is just today. Just start today, wherever you are, whether you’re 30, 35, 45, 55. And I think the best advice I can give people is just start really small. If you don’t have a lot to save, if you don’t have huge amounts that you can put towards paying off your debt, start very small and build up from there. Even if say you’re almost done paying your student loans off and you’re starting to think about saving for retirement, even if you can start saving 1% of your pay and then commit to moving it up by a percentage point, say every three or four months, programs like that eventually will get you on track.

26:58 Andy: And I think taking those baby steps is important because the idea of saving for retirement, it’s one of the biggest financial burdens we’ll ever have to face and it can be really overwhelming. I think for a lot of people, when they hear numbers like, Oh, you need to save 15 or 20% of your income, they think of it in this very binary way. They’re like, well, can’t do that, so I guess I just won’t do it at all. I think what I would really emphasize is just start small and just build up incrementally and you will get there and no matter how much you’re ultimately able to save, you’ll be really glad you did it.

27:32 Emily: Yeah, I completely agree, especially about people being turned off by the big numbers of savings percentages. I remember when I was in graduate school and reading the advice of like have a three to six month emergency fund, I was just like, no way, there’s no way I can save up whatever that would have been at the time, $6,000 or something like that. I saw that as totally out of reach and so I really just didn’t even try. I fell prey to the same kind of psychology that you just said there. But like you said, just saving as much as you can or putting as much as you can towards debt — could be $5, could be $10 — I think one of the most transformational things about that is not necessarily the amount of money that you’re putting towards savings, but just the fact that you have changed your identity to “I am a saver, I am repaying my debt and I am a person who invests” and that alone can be super powerful and is a great building block on this path towards wealth, even if the numbers are not that big yet.

28:31 Andy: Absolutely. I couldn’t agree more. I think that identity piece is as important or more important than those initial dollars that you’re able to save. I hope people take heart and realize that when you’re just starting on the journey, it’s a little bit like when you watch a rocket ship take off, like watching a space X launch or something. It starts super slow at first. It’s really hard. There’s a gravitational pull that you have to get past, but the momentum builds over time. And once you start to build that momentum, it gets easier and easier. The hardest dollar to save is that very first dollar and every dollar will just get a little easier beyond that. Then eventually once you’ve started to invest as well when you’re at that stage, those dollars will be making more dollars for you while you sleep. That’s the idea of compound interest. Just know that it will never be harder than it is right now and that it does get easier progressively over time.

29:26 Emily: Yeah. Thank you so much for adding that insight. I totally agree. You hear it in the personal finance community: the first hundred thousand is the hardest to get to in terms of your investments and then getting to the $200,000, $300,000 is so much easier, it takes so much less time. But if we’re talking to grad students, let’s lower that scale — the first $10,000, the first $1,000, the first $100 — every order of magnitude that you go down, it is the hardest at that stage. Once you get that compound interest working in your favor, it happens while you sleep, as you said. I know I’ve experienced this in my own life from grad student years, scrimping to save even $5 more per month was like a big accomplishment and now things look very different 10, 15 years later, in terms of the compound interests working in my favor. I can kind of personally attest that yeah, that first hundred thousand, which I’ve well-documented in the first podcast episode that I published actually, was definitely the hardest. It’s been a lot easier since then.

Going Back to Grad School After a Career Shift

30:25 Emily: Andy, I want to get back to your own story because that’s taken another twist. You’re a CFP, you’re working with clients, but you’ve also recently decided to go back to graduate school. Tell us about that decision

30:40 Andy: There’s still that part of me that identifies as a great student and a person who loves school and I’m actually really grateful to have held onto that identity and so a couple of years ago, I started thinking about going back to school and I ended up signing on for the Masters in Financial Planning Program at Kansas State. I did a dual concentration. Half of the degree was really focused on advanced financial planning, so kind of the numbers side of things — taxes, estate planning, that kind of stuff. The other half was focused on financial therapy, so really taking a very deep dive into the psychology of money.

31:18 Andy: I’m finishing that degree actually in March, so I’ll be done in March and my next juncture is to decide if I want to do the PhD, which it’s so funny to me to think that I might yet again, be considering a PhD, but I think I’m doing so with a different head on my shoulders than before. If I decide to do the PhD program, which I think I will at this point, it’ll really be to further what’s been done with regards to academic research around the field of financial planning because not a ton has been done. It’s a very under-researched field.

31:52 Andy: I wouldn’t want to stop being a financial planner. The way a lot of folks do it in the industry is they get the PhD and then they sort of spend 70% of their time in practice and then the other 30% of their time doing research and publishing and doing some teaching. That for me seems like a pretty good balance, kind of having my foot in one door and the other as well, right now. We’ll see! Hopefully we can check in again in a couple of years and I’ll tell you what I decided.

32:17 Emily: Yeah, that would be excellent!

Best Advice for an Early Career PhD

32:18 Emily: Andy, I wrap up all my interviews by asking my guest, what is your best financial advice for an early career PhD? We’ve obviously already said a lot of advice throughout the course of the interview, but did you have something that you wanted to underline for us or maybe something new that you wanted to throw in?

32:34 Andy: Absolutely. I don’t know if it’s new, but I would definitely say that if it isn’t new deserves to be reemphasized and that is to me, the best investment you can make at any age, if you haven’t already made the investment is in your own financial education. Before you even start thinking about index funds and long-term savings and 401ks and things like that, just investing in your own knowledge and establishing a baseline understanding of personal finance, I think is the best possible thing anyone can do.

33:05 Andy: One critique I have the financial services industry is that I think a lot of the messaging has been set up to tell people this is too complicated or too time consuming or whatever “too this” or “too that”. It’s not for you to do, it’s for you to hire us to do. I think in some cases that’s true. When things do get complicated, it is really helpful to have a professional. I believe that obviously as a financial planner. But the basics are not complicated. It’s not to say it’s easy to master them because you know, saving money is never easy, but the principles are not complicated. I always just recommend folks, if you can take 10 or 12 hours, you will basically have mastered the fundamentals of personal finance.

33:49 Andy: A couple of books that I always recommend to people — one is The Index Card by Helaine Olen and Harold Pollack, which is rooted in this idea that basically everything you need to know about personal finance can fit on one five by seven index card. I love that idea and I tend to agree. A second one I’ve already mentioned is The Psychology of Money by Morgan Housel. If The Index Card tells you how to do it, The Psychology of Money is like a user’s guide to your money brain, which is a pretty interesting part of your brain as it turns out. And then the third is The Millionaire Next Door by Thomas Stanley. That’s probably my all time favorite because it really shows that the type of people who become millionaires actually aren’t the ones who you would think become millionaires. It’s not the people driving Mercedes and BMWs and living in fancy neighborhoods. It’s the people who have high savings rates. You don’t see their wealth because it’s all stowed away in investment accounts. I find that book just to be very empowering. Invest in your education, that would be my advice.

34:51 Emily: Yeah. I completely, completely agree. And also starting with books, I really love that idea. It’s kind of old school, but it’s how I started my journey into personal finance as well was reading some well curated material. Actually since you mentioned books, inside the Personal Finance Community, we are currently as of December, 2020 reading The Millionaire Next Door in our book club. Morgan Housel’s book is on the slate for January, 2021. And then The Index Card is one I have not read before, but it’s actually been on my list as another book to consider for that. I’m not sure when this will be published, but when it is, if you’re interested in reading these kinds of books along with some of your other peers, check out the Personal Finance for PhDs community, pfforphds.community, you can see what the current book is we’re reading, the next one on page. If that’s your thing, please come and join us and have some discussions around these books because I love taking these sort of general personal finance texts and bringing it into, okay, well, how does this apply to graduate students and post-docs and early career PhDs? What is this really saying to our population with our particular psychology and career path and so forth. I totally agree with your advice about investing in your education. That’s one way people can do it if they want to do it with me and with others in our community.

36:03 Emily: Andy, last, last question here is where can people find you if they have really connected with you during this interview? Or maybe they want to recommend you to someone in their life?

36:13 Andy: Yeah, absolutely. ThePlanningCenter.com, you can find me there. You can find my email there as well, which is andy@theplanningcenter.com. I’m on LinkedIn, very active on LinkedIn for a time. Tried to get active on Twitter so you can find me on Twitter, but I will say I’ve neglected my Twitter page and find the whole thing to be a bit overwhelming. So probably email or website or LinkedIn would be the best.

36:36 Emily: Thank you so much for joining me today and for giving us your insight

Listener Q&A: Are Fellowships Taxable

Question

36:47 Emily: Now on to listener question and answer segment. Today’s question was asked in advance of one of the live Q and A calls I host as part of my workshop, “How to complete your grad student tax return and understand it too.” Here is the question. “Is the NSF GRFP fellowship taxable? It’s not listed on the 1098-T form. I have no tax documents relating to it.”

Answer

37:12 Emily: Yes, the NSF GRFP is, generally speaking, taxable income, even if it’s not reported on any tax forms, I’ll quote from publication 970, page five: “A fellowship grant is generally an amount paid for the benefit of an individual to aid in the pursuit of study or research.” Fellowships can be tax-free under certain conditions, which implies that they are not tax-free if they don’t meet those conditions. Publication 970 page five further states: “A scholarship or fellowship grant is tax-free only to the extent it doesn’t exceed your qualified education expenses.”

37:52 Emily: There are two additional points that further limit the conditions under which fellowships are tax-free but just going off of that first one, if your fellowship exceed your qualified education expenses, it is not tax-free. The NSF GRFP is composed of two parts, a $34,000 stipend and $12,000 for a cost of education allowance. If the $12,000 to the institution goes entirely to qualified education expenses, for example, tuition and required fees, that portion would be tax-free. To whatever extent the $34,000 stipend goes toward qualified education expenses, it would also be tax-free, but I suspect that little to none of it does, perhaps just some required course related expenses at most. You probably use the stipend for your personal living expenses and savings and that means that it’s not tax-free. Strangely enough, the IRS does not require universities and funding agencies to report fellowship income in any way. Some universities do report the NSF GRFP award on the form 1098-T, but others do not. It’s completely up to their discretion.

39:03 Emily: If you would like to learn more about the taxability of fellowships, please listen to season two, bonus episode one. To go even deeper into how to calculate your taxable income and higher education tax benefits as a grad student, whether you have a fellowship or not, please join “How to complete your grad student tax return and understand it too” at pfforphds.com/taxworkshop. If you’d 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

39:41 Emily: Listeners, thank you for joining me for this episode. PFforPhDs.com/podcast is the hub for the Personal Finance for PhDs podcast. On that page are links to all the episodes show notes, which include full transcripts and videos of the interviews. There is also a form to volunteer to be interviewed on the podcast and instructions for entering the book giveaway contest, and submitting a question for the Q&A segment. I’d love for you to check it out and get more involved. If you’ve been enjoying the podcast, here are four ways you can help it grow. One, subscribe to the podcast and rate and review it on Apple podcasts, Stitcher, or whatever platform you use. If you leave a review, be sure to send it to me. Two, share an episode you found particularly valuable on social media, with an email list serve, or as a link from your website. Three, recommend me as a speaker to your university or association. My seminars cover the personal finance topics PhDs are most interested in, like investing, debt, repayment and taxes. Four, subscribe to my mailing list at pfforphds.com/subscribe through that list. You’ll keep up with all the new content and special opportunities for Personal Finance for PhDs. See you in the next episode! And remember, you don’t have to have a PhD to succeed with personal finance, but it helps. Music is Stages of Awakening by Poddington Bear from the Free Music Archive and is shared under CC by NC podcast, editing and show notes creation by Lourdes Bobbio.

This Grad Student Didn’t Let a $1,000 Per Month Stipend Stop Her from Investing

by

In this episode, Emily interviews Dr. Rachel Blackburn, an assistant professor at Columbus State University. Rachel’s PhD stipend at the University of Kansas was approximately $1,000 per month and her rent claimed half of that, but she resolved to do more than scrape by financially. Emily and Rachel discuss in detail how Rachel optimized her pay rate in her side hustles, generated extra income through credit card churning, and travel hacked her personal and professional trips. By combining these techniques, Rachel not only contributed to her Roth IRA during grad school but also paid down student loan debt. You won’t want to miss the excellent insight she shares at the end of the interview.

Links Mentioned in the Episode

Teaser

00:00 Rachel: Don’t underestimate your own creativity. One of your strengths and skills as a PhD student is researching, so why not take that same skill and apply it to your financial life?

Intro

00:18 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 12, and today my guest is Dr. Rachel Blackburn, an assistant professor at Columbus State University. Rachel’s PhD stipend at the University of Kansas was approximately $1,000 per month, and her rent claimed half of that. But, she resolved to do more than just scrape by financially. We discuss in detail how Rachel optimized her pay rate in her side hustles, generated extra income through credit card churning, and travel-hacked her personal and professional trips. By combining these techniques, Rachel not only contributed to her Roth IRA during grad school, but also paid down student loan debt. You won’t want to miss the excellent insight she shares at the end of the interview. Without further ado, here’s my interview with Dr. Rachel Blackburn.

Will You Please Introduce Yourself Further?

01:17 Emily: I have with me on the podcast today, Dr. Rachel Blackburn, and she has a really exciting story to tell us from back when she was in graduate school, how she managed to generate extra income so that she was able to start a Roth IRA which is just an amazing goal and I’m so excited to hear more about the story. So, Rachel, thank you so much for joining me today, and would you please introduce yourself to our listeners?

01:40 Rachel: Yeah, thank you so much for having me. So, I am Dr. Rachel Blackburn, and I am currently an assistant professor at Columbus State University, which is in Columbus, Georgia.

01:51 Emily: Great. And where were you in graduate school?

01:55 Rachel: So, I did a Master of Fine Arts degree at Virginia Commonwealth University, and then I did my PhD at the University of Kansas.

02:04 Emily: Excellent. So, you’ve moved around quite a bit, it sounds like.

02:08 Rachel: Yeah, I have.

02:11 Emily: Tell me about your stipend during graduate school and why you needed to look outside of that–why you ended up generating extra income.

Grad School Stipend at the University of Kansas

02:20 Rachel: Yeah, absolutely. So, during my MFA program, it was all student loans. That’s all it was. And when I got to my PhD at KU, I was really determined to not take out any more loans no matter what my stipend was. And my stipend was basically $1,000 a month, and my rent was of course about half that. And so, I realized that if I ever found myself in a situation where–it was okay to scrape by, like if I budgeted really carefully, I knew I’d be okay. But I was worried about unforeseen elements like a car breaking down, a major hospital visit. You know, something that would really require me to come up with a lot of money at once. And that’s what I was concerned about.

Balanced Money Formula: Necessary Expenses = 50% of Pay

03:08 Emily: A couple of points in there that I just want to follow up on it because I think it’s a great example for anyone who’s maybe looking at a stipend offer letter or maybe you’ve just started graduate school and you’re kind of still figuring out what your budget’s going to be. So, you just mentioned your rent was about 50% of your pay, which is sort of widely considered to be too high. Right? So, according to the balanced money formula, which to me is a good reference point, all of your necessary expenses should be about 50% of your pay. So, not only rent but also utilities and paying any contracts that you’re in and your transportation and your basic food–all of that stuff is supposed to be within 50%, which is actually a high bar for many graduate students to reach, but it’s just kind of a good reference point.

03:53 Emily: So, you knew seeing rent at 50%, this is going to be pretty challenging. And like you said, you also were anticipating having occasional large, hard to cashflow expenses, which is so, so common. Anyone who lives for about a year or longer, you’re going to realize you have these large expenses sometimes. So, that’s why you turned to generating extra income outside of your stipend. So, did you start that right from the beginning of graduate school–or, rather at the beginning of your PhD program–and I’m wondering, was this a common thing among your peers? Did your advisor know about it? Was this a thing that people did and they were open about or was it more kept quiet?

Side Hustles and Financial Situation Often Kept Quiet

04:34 Rachel: You know, it was really kind of kept quiet. I don’t know how many students revealed to faculty that we were all taking on side hustles. I think maybe later on it did when push really came to shove and things like my advisor saying, “I think we need to look to defend your dissertation in the following semester instead of this one.” And me being like, “I literally cannot afford another semester of tuition. You’re going to have to help me get this done now.” So, things like that. I think when push came to shove, we probably revealed a little bit more about our financial situation, but really the only people that were doing okay in grad school and didn’t need to side hustle were frankly people that had two-income households. So, most often married couples. Yeah.

05:25 Emily: Yup. Super common there. I mean, really, paying $1,000 a month. The faculty should be aware–I mean also living in the same city, right? And presumably having a much higher income. They should be aware that that is not enough to live on without either taking out student loans, which as you said, people have enough experience with student loans to know that they should avoid them if at all possible. No, it’s really not enough to live on. So, it should be no surprise to anyone that this is going on. Yet, as you said, most of the time, it’s not really something that is talked about very openly, at least between students and their advisors or students and the administration. Maybe students, among themselves, talk to each other. Okay. So, thanks for giving us kind of the picture for being on the ground there. So, just give me a quick overview. What were your methods of generating extra income that we’ll then dive into?

Primary Side Hustles: House and Pet Sitting

06:15 Rachel: I would say, primarily, my side hustles were housesitting and pet sitting. Those were easy to do, and what was great about them is that if you did a decent job with one, that professor would recommend you to other professors. And professors are always going out of town for guest lectures and conferences. A lot of them have pets. If you have a halfway decent sense of compassion as a human being, you’ll be fine taking care of a pet. Some just want their plants watered or some just want their home to look lived in while they’re away. So, falling into that circle is a really great thing. And that was a lot for me. Also, I did some teaching online and there are various ways to do this. So, I actually taught online for a community college in just outside of Lawrence (KS). And also, another hack about this is that if you’re interested in possibly teaching English online, for whatever reason, there are a lot of companies specifically for Chinese and Korean and Japanese students who will advertise their online teaching English programs, but they will do so on the New York City Craigslist. At the end of the day, you only need be online. You don’t have to live in New York City, but they’re targeting those bigger markets because they’re just expecting to have more people that they can interview. And so, I honestly went on to New York City’s Craigslist a number of times and found online teaching that way as well.

Secondary Side Hustles: Online Teaching and Waiting Tables

07:43 Emily: Just to jump in there, I have another interview where another grad student is currently side hustling with VIPKid, which is one of the companies that you just described that offer that kind of work. So, if anyone’s specifically looking for a company that’s going on right now and we’re recording this in July, 2019, check out VIPKid and check out that other interview. Yeah. Any other online teaching besides that, that you did?

08:08 Rachel: Those mainly comprised what I did online. Now, some people are a fan of waiting tables. This is also something I did. And, really, the only hack there is that if waiting tables is something that really takes it out of you, energy-wise–and it can, you’re on your feet the whole time–I recommend if you can only do it like once a week, do it on a Friday or Saturday night when the restaurant is busiest, that’s when you’re going to make the most tips. Doing a Wednesday lunch is not going to help you out. Doing a Friday night dinner might actually cover your groceries that week, or what have you. So, that’s the hack there. Try and get signed up for the busiest times.

08:48 Emily: Get that hourly rate up as high as you possibly can so you can minimize the number of hours you actually have to do it. Okay.

Side Hustling Apps

08:56 Rachel: I will just add really quickly that there are a few apps out there that can help you generate income as a side hustle. I made a list of some that I’ve used. So, Rover is a pet sitting app, so sign up to petsit. TaskRabbit is basically anything. So, somebody in the neighborhood needs help painting a fence. That’s TaskRabbit. Turo, you can rent your own car out to other people. That’s T U R O. Fat Llama is where you rent out your own possessions. So, say you have a Nintendo Wii sitting around not being used. You could rent out your Nintendo Wii for a weekend to some kids. So, there’s that. Also, Instacart is where you shop for other people. So, anyway, those are some of the ones that I’ve tried.

09:44 Emily: That’s awesome. Thank you so much for adding those specifics. In fact, I guess I talk about side hustling a lot on this podcast because in fact we have another interview where someone’s talking about using Rover and another interview where someone is discussing Instacart. That’s season three, episode two with Shana Green. That one’s already out. So yeah, to follow up on any of those, but thank you so much for giving those specifics. That’s a really great next step for anyone looking to those side hustles. And we also wanted today to talk about credit card churning and travel hacking. So, the listeners may not be very familiar at all with what credit card churning is, what travel hacking is. So, can you start with some basic definitions here for, let’s say, credit card churning first?

Credit Card Churning Fundamentals

10:29 Rachel: Yeah. So, credit card churning is the idea that you take advantage of credit card signups who are offering major big signup bonuses for when you sign up for that credit card. Now, let me preface and say that I’m really just a beginning level churner, like beginner-level churner. Some people are really sophisticated with how they’re tackling this. And I’ve seen spreadsheets of multiple cards when you’re signing up, when you’re canceling the card and things like that. In a nutshell, that’s credit card churning.

11:10 Emily: There’s suddenly a huge subculture within personal finance that is specifically about credit card churning and maximizing credit card rewards. So, if people want to dive, dive, dive into this, that is available. We are fine with the beginner level here. So, whatever you’ve been doing is great. I want to specifically point out that there’s a difference between credit card churning and having credit cards on a longterm basis that give you ongoing reward. So, what we’re specifically discussing today is getting, as you said, those signup bonuses. And so signing up for new cards fairly frequently, doing whatever you need to do to get the signup bonus. And then usually either moving on–keeping the card open, but not using it anymore–moving onto the next card in your churn list, or, potentially closing it pretty quickly. So, just wanted to clarify that for the listeners. So, can you tell us how you got started with this? What was the first credit card you opened for this purpose, for example?

12:06 Rachel: Yeah, absolutely. So, my first year in my PhD program, I was friends with a guy who was an entrepreneur and he was opening his own business. And he fell into the credit card turning scene because he was starting to try and figure out, “How can me and my business partner fly around the US? Because we anticipate that we’re going to fly a lot. So, how are we going to cover all of those tickets?” And so, he really introduced me to the world of credit card turning. So, I should say from the very top that if you’re someone who has trouble paying off your credit cards every month, if you have not so good credit, it’s not the best thing. It’s really ideal for someone who’s really good at paying off the full amount every month, who’s really good at not spending a credit card on things that either you don’t need or things that may be superfluous to your daily life. And so, the one that I opened was Chase.

Disclaimer: Use Credit Card Churning Wisely

13:10 Emily: I want to jump in a second and just emphasize that point because credit card churning and using credit card rewards is really a fairly advanced strategy. I would not recommend this for anyone who is new to using credit cards. My personal rule on this would be use credit cards in your life, in your regular budgeting for at least one year before you even attempt something like this. Because you need to have a lot of confidence in yourself, as you were just saying, that you’re going to be paying off that card in full every month, that you’re not going to be spending any extra money just for convenience factor or whatever it is because you’re excited about the rewards. You need to be a super, super good budgeter and super, super organized before you jump into this world. And it can be really lucrative, as we’ll get into in a moment. So, it’s very tempting, but show restraint. Hold back. Be sure you have your budget totally aligned before you try to attempt it. I’ll link in the show notes, I have an article that I wrote previously called, “Perfect Use of a Credit Card.” So, that will outline what you need to master in terms of using a credit card before you jump into what we’re talking about now. So, thank you so much for emphasizing that. Now, you were just mentioning that you opened a Chase card, first.

14:18 Rachel: Yeah. So, when I first started to get into this–now, like I said, I just wanted to take baby steps. I have used credit cards for most of my adult life, and I feel pretty confident with my use of credit cards that I don’t really have an addictive personality. I don’t go gambling or drink alcohol very much. I’m just kind of pretty unattached that way. So, I felt confident starting to do a baby churn with just one card. I should also mention by the way, that if you open too many cards within the space of 12 months or 24 months, some credit card companies will take note of that and they’ll say, “Okay, don’t give them any more cards.” And it can damage your credit that way. So, that’s just something to be aware of.

15:03 Rachel: So, I recommend, personally speaking, I would probably top out at three in the space of one year. I think that’s plenty to keep up with. So, Chase, for example, had a credit card, and often what they are is that there’s a signup bonus and in order to achieve that signup bonus, which is usually in the value of points and then those points can be exchanged for either travel points, like they can translate to air miles. They can translate to gift cards. Sometimes they can translate to cash back. With Chase–and I did this a few years ago, so I can’t speak to what it is now, but–when I took the Chase card a few years ago, I crunched the numbers and I basically found that gift cards was my biggest bang for my buck. So, I exchanged my signup points all for gift cards for things that I would spend money on regardless, like grocery stores, gas stations, things like that, Walmart, those kinds of things.

Credit Card Churning: Timing is Everything

16:05 Rachel: A lot of these signup points are dependent on you spending a certain amount of money within the first three months, that’s often the typical amount of time. So, I would time my opening a credit card with an event in my life where I knew that I’d be spending more money than I typically do. So, say for example, I think mine was $1,000. I had to spend $1,000 within the first three months of opening this card. And if I did, I was given a reward of 50,000 points, which ultimately translated to my plane ticket to a conference I was presenting at. So, I timed this for when I had been to the doctor and I’d had a hospital visit and I knew I was going to be paying off a lot of doctor’s bills. So, I knew I’d be spending that money anyway. So, that’s how I timed it.

16:53 Emily: We use the exact same strategy–I wouldn’t say we were credit card churning, but signing up for signup bonuses from time to time–doing the exact same thing as you did, like looking at our upcoming six months or a year, whatever, and identifying a few points in the year where, “Okay, we are going to pay our car insurance once every six months.” So, that’s like a pretty big bill, we can put that on the card. “Oh, we’re going to have to buy a flight to here or there. We can put that on the card.” All within a window that was the window that we needed for achieving the signup bonus. So, we did the exact same thing. I think that meeting those minimum spending requirements can be, very typically, a challenge for someone who lives on a lower income, right?

17:31 Emily: Because you don’t have a lot of spending that goes on in a given month, let’s say. Most people will not be paying their rent with a credit card. Usually you have to pay a fee or something to do that. So, if you’re going to exclude rent from this calculation, then there are not that many other things, maybe, that will help you achieve this minimum spend. So, definitely looking your calendar and anticipating upcoming expenses, signing up for a card that’ll give you the right window when you’re going to have to pay those expenses. There’s a little bit of a trick to it when you have a lower-spending lifestyle.

18:00 Rachel: Absolutely. Timing is everything. I also didn’t realize, even for myself, how much I spent cash on lots of things. When I started really concentrating and focusing and saying, “Okay, I could pay cash for this, but I could pay a credit card. Let me just pay with a credit card.” I’m starting to realize that there are very few instances in which it benefits me to use cash, to be honest. Now, I do keep cash on me at all times, just in emergencies. Who knows. But I did start using a credit card for a lot more things than I had. And I find that the rewards do come back to me. Yeah. But no, that’s a fair point. Timing is everything with the credit card churning. When you open the card, when you decide to cancel the card, that kind of thing. Yeah.

Credit Card Points for Gift Cards and Air Miles

18:50 Emily: So, you said that for you, you probably max out at about three cards per year. That’s what you’ve decided you can handle in your personal spending and tracking everything. Other people do a lot more, but that’s what works for you. And that, when you first started doing this, you would trade these points you generated for gift cards because that was what you figured was going to be maximizing those points. Has that continued to be the case? So, do you always do gift cards, or have you redeemed for other types of rewards?

19:18 Rachel: At one point, I did redeem for travel points because, like I said, I was paying for a plane ticket. So, it was easy to translate those to air miles and to do that. What I have found, in my experience–what’s helpful is letting life happen and determining, “Oh, okay, you know what? This month, I have a lot of unexpected expenses. So, actually what I could do to save myself some money this month is go ahead and redeem some points for, say, a grocery store gift card or a gas station gift card. Because that helps offset the unexpected expenses that I’m having.” However, later on down the year, I might find like, “Oh, I really need to take a trip to this conference,” or, “I need to go on this research trip.” And at that point, maybe the air miles are more helpful.

20:10 Rachel: So, it just depends. The nice thing about gift cards too is that if you want to, dare I say, splurge, and get yourself a gift card to like AMC Theatres so you can see a movie, or something that’s like a small, not too expensive luxury. Later on, when you go use that gift card to go see that movie, you don’t really feel as guilty about it because you’re not spending your own money. You’re actually just spending the rewards that you’ve already incurred from paying on your credit card. So, that’s kind of a nice thing that I feel like is a guilt-free way of treating yourself to the occasional movie, or what have you. Because, as we all know, grad school is so stressful. Yeah.

Credit Card Churning: Spreadsheets Are Your Friends

20:53 Emily: I really like that strategy that you’re using the points or whatever that you build up as almost kind of a piggy bank that you can then deploy as needed in the future. And of course, using it for lifestyle upgrades, like going to the occasional movie or whatever you want. When you have your stipend paying your baseline expenses, then you can use your side hustle money, the credit card rewards, whatever it is, for big expenses as they come up to ease your stress or just more of life’s pleasures. So, I really like that strategy. Any other things you want to share with us regarding credit card churning?

21:27 Rachel: I really do recommend keeping a spreadsheet with all of your information, just to make sure that you’re keeping track of what you’re spending, you’re keeping track of, “Is this really for sure financially benefiting me? Am I getting rewards?” Versus, “Am I tempted to spend more money just because I’m trying to meet some kind of signup reward, or something.” Also, don’t be afraid to cancel credit cards. A lot of these cards start off free the first year, but then have an annual fee that they’ll charge you. And sometimes those annual fees hit you and you go, “Oh no, I didn’t realize I was already a year out from when I started this card.” So, you know, make sure that you keep a tally of dates of like, “Okay, I need to make sure I cancel this card by this date,” and so on and so forth. Just to keep yourself on the straight and narrow with the churn.

22:18 Emily: Totally. Totally agree. I have to admit myself, just last month I had an annual fee for one of my cards hit, and I was kind of like, “Oh I guess I’m keeping that card another year.” I mean, I could probably still call and get out of it, but I was kind of debating, “Should I cancel it before the year is up or should I keep it?” And then the year was up before I had my bearings about it. So, I’m going to start a spreadsheet and put that in because I’m definitely canceling it by the end of the second year. In fact, it’s already on my calendar as a reminder to do that. So yes, being very organized, super, super crucial with this strategy.

Commercial

22:57 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.

Let’s Talk More About Travel Hacking

24:01 Emily: So, let’s talk more about travel hacking. And you already mentioned using the credit card signups to then generate points that can be translated to different airlines depending on the card and who their partners are. So, that’s definitely one way to go about travel hacking. But you said you had a few other travel hacks that you like to use.

24:19 Rachel: Yeah, I do. So, okay. So, some of these are really simple and kind of a onetime thing. Some of these are a little bit more “shady,” if you will. Not shady, I’m not going to recommend anything illegal, but a little sneaky. So, one of the sneaky things that I did, and I’m sure I can’t be the first person to do this or come up with this, but I would be very careful about timing my applications for funding within the university, because some funding applications will say, “Are you receiving funding for many other source?” And I want to be able to say, “No, I’m not.” And that’s true if I have not yet received official funding from another source. So, I was very careful to time my applications in such a manner that allowed me to always be able to say, “No, I’m not receiving funding from another source.” And if I then applied to another source after I submitted that application, well you know, who could have foreseen that I would do that. So, that’s one. Yeah. Another smaller hack is that a lot of us, I think, forget that as grad students, we’re still entitled to student discounts. So, things like STA Travel, which is the Student Travel Association. They have a website where you can look up airfares and all kinds of things. That’s something to take advantage of in addition to all of the sort of usual suspects like couchsurfing and Airbnb, and things like that.

25:52 Emily: I don’t know about Student Travel Association. Can you say more about that?

STA Travel and Hostelworld

25:56 Rachel: Oh yeah, sure. Student Travel Association. I discovered them when I was in college, actually, because I was studying abroad and I was looking into airfares and things and wondering if, “Is there a way I can hack my way into traveling more beyond my study abroad semester?” So, that’s when I discovered STA Travel. STA Travel covers a lot of things. They also, and I could be wrong on this, but I believe they are the same company that issues international student identification cards. That’s the ISIC card, International Student Identity Card. And that has some benefits to it. In fact, recently they’ve started making them like a credit card so you can even add money onto them and use them as a form of payment. But yeah, STA Travel has a lot of different options. And some of the airfares might be, the stipulation is merely just that you’re a student. Some of them might be, you need to be 35 years and younger. So it kind of depends. You have to check it out. But it’s at least another source.

27:00 Emily: This reminds me, and maybe this is part of that association, but just about hostels–like some of them are only open to students or maybe people of a certain age; not super common in the US. But abroad, much more. So, is that kind of the same idea?

27:14 Rachel: Yeah, absolutely. And actually when it comes to hostels, if you haven’t discovered Hostelworld–hostel W O R LD.com–they’re a great source for housing. And I’ve used them abroad a lot. But in the bigger cities in the U S you’ll find Hostelworld locations, too. And it’s amazing how cheap you can get. A lot of people say, “Well, I don’t feel comfortable sleeping in a room with 10 other people that I don’t know for $10 a night.” A lot of properties on hostelworld.com do offer private rooms, and they’re still cheaper than what you would find on Airbnb.

27:54 Emily: I actually used Hostelworld–I think it was through Hostelworld–when I traveled to Chicago one time when I was in graduate school. And my husband and I, who had no interest in staying in separate rooms with many other people, were able to book a private room together at the hostel, which worked out really well for us. It was very inexpensive. So yeah, thanks so much for mentioning that. And also STA Travel. I spent 10 years in college and graduate school and I’m really kicking myself that I did not know about this. So, thank you so much for mentioning it. What’s the next travel hack on your list?

Budget Airlines, Driving, and Incognito Browsing

28:26 Rachel: Yeah. Okay. So, some of those websites also worth mentioning briefly if you ever are traveling abroad. Ryanair and EasyJet are budget airlines and they’re really inexpensive. That’s helpful to know. But unfortunately, those seem to be limited to Europe. Okay. So, I’ve also crunched the numbers on this, and if it’s possible to drive and if you are receiving funding for say a conference or a research trip, driving actually optimizes the money that you’re spending because you might actually get more back. A lot of universities have a really nice high mileage reimbursement for driving. And so if you can drive but you were thinking of just taking a plane just because, it might actually be worth your while financially to drive. Another thing is, I don’t know if this is widely known, but browsing “incognito” on your browser when you’re looking at flights and hotel rooms and things like that.

29:27 Rachel: So, with most browsers, you just go to the settings. I use Google Chrome. So, for Google Chrome, it’s the upper right-hand corner, and you pull down the dropdown menu and you just say that you want to browse incognito. And what that does is it sort of erases all of the memory and cookies that are stored in your browser. And for whatever reason, say like Orbitz for example, if they know that, “Oh, Rachel Blackburn comes to us and she buys plane tickets through Orbitz a lot, we can probably charge her just a little bit more because she’s likely not going to look at any other sites for fares.” And so browsing incognito takes away their ability to do that.

30:12 Emily: Yeah, really good tip. Anything else in that travel hacking list?

For the Bold and the Brave: Motel Pricing Negotiation

30:18 Rachel: Okay. So, one thing I’ve done–and this might be a little on the riskier side, and I certainly would never, ever blame anybody for not wanting to do this–but, let’s say I’m driving long distance and I know that I’m going to have to crash somewhere. If you feel comfortable, and especially as a single woman, maybe you feel more comfortable doing this if you have a friend with you or something like that. A lot of hotels that are these kinds of like motels that you see on the side of the highway when you’re driving long distance and you’re kind of in the middle of nowhere. They will lower their fares quite a bit if you show up late at night and you’re like, “Hey, I need a room.” And they’ve only got like maybe 10 other people in the hotel and they’ll say, “Okay, it’s $99 for the night.” And I’ll say, “Oh, you know what? I’m sorry. That’s a little bit more than I was wanting to spend. So, I’m just going to go on.” And then they’ll say, “No, no, no, no, wait.” Because who else is going to drop by late at night to stay? So, a lot of them will actually negotiate fare with you, and they’ll drop it down, say like, “Okay, well can you do 75?” “Yeah, that’s better.” Okay. Now, that does mean that you’re not making a reservation ahead of time. You also run the risk that they may not negotiate with you. That can happen too. So, if I’m taking this route, I try to always stop off in a town that’s large enough to have at least three or four off-the-highway motels where I can try that tactic.

31:52 Emily: I’m really glad you mentioned that because we have so few opportunities for negotiation in the US for these types of sales. So, yeah, that never occurred to me, but I really like this strategy. I can’t say I’ll necessarily do it, but I like the idea.

32:08 Rachel: Yeah, it’s for the bold and the brave for sure.

32:11 Emily: I mean, if there is a town where there are two, three, four of these, then they know that you can just walk down the street and try the same tactic. It’s not going to cost you hardly any more time. So, why not? How late is late at night by the way, for you, after what time?

32:25 Rachel: Hmm, that’s a great question. Most people, especially thinking of highway driving, a lot of people like to be in a motel before it gets dark, especially people with families and stuff like that. So, I would say any time after sunset you’re good to negotiate. Yeah.

32:44 Emily: Yeah. Sounds good. Any more travel hacks?

Inviting (non-PhD) Friends to Conferences

32:49 Rachel: One thing I have done, and I wouldn’t exactly call this a hack, and anytime I have done this, I’ve been totally upfront with my friends about it. If I’m going to, say, a research conference or a research trip or something. I’m going somewhere, I can anticipate I’m going to need a hotel room or an Airbnb. I will often invite my friends along, and not friends who are PhD students, but just friends of mine. And I’ll be upfront and I’ll say, “Listen, would you want to come hang out with me in this city for a weekend? We can split an Airbnb, and when I’m at my conference, you can do your own thing. And when I’m not at my conference, we can hang out together.” And I’ve done that before and it’s great. It’s a double benefit of getting to see friends that you wouldn’t otherwise see. But also, you have someone to share the conference with who’s not necessarily associated with the conference. So, I did a research trip to LA at one point and I invited two of my girlfriends along, and I said, “Hey, I’m going to be in LA for a long weekend. Come hang out with me. There’s going to be times when I’ll have to be at this conference, but most of the time I’ll be free to hang out.” And so they shared an Airbnb with me and immediately split my Airbnb three ways instead of one way. So yeah, that’s another hack, sort.

34:06 Emily: Yeah, why not? If you’re going to a desirable location and you like your friends and like to hang out with them, no harm in suggesting it, certainly.

34:13 Rachel: Yeah. I mean, I know so many people that go, “Oh no one else is going to this conference. I guess I’m footing the bill for the whole hotel room by myself.” And it’s like, “No, you might have some friends who like to travel and who would love the excuse to just get away for a weekend.” So, yeah.

34:33 Emily: Yeah. I like that idea.

Prefixes: To Doctor, or Not To Doctor

34:35 Rachel: Okay. Last one. This is the last hack. I often, when I’m booking a hotel or a plane, I have read that specifying your prefix as doctor can make a difference. Even if you’re not a doctor yet, what are they going to do? They’re going to go find your transcripts? Probably not. I don’t think American Airlines has time for that. So yeah, start using doctor as a prefix. It couldn’t hurt.

35:03 Emily: So, when you say that it can help, what do you mean? Would that actually change the rate that you’re paying, or what difference would it make?

35:13 Rachel: Yeah, well I’ve read stories of people saying that they got a better seat or they got a better rate. Sometimes it might just be like, “Oh, you’re a doctor? Continental breakfast is free for you,” or whatever. Or maybe it’s just a few dollars off your bill, or something. But my guess is that this only leads to really minute differences, but again, every little bit helps. Why not? Worst-case scenario, somebody calls you Doctor?

35:44 Emily: Yeah, I think I may try this out. I’m trying to remember. I think in most cases when I travel, I don’t use doctor as a prefix because I don’t want to be approached with a medical situation on a plane. Of course, I’ve never even seen that happen. So, the chances that it would are really, really, really tiny. But I think that’s been my reason to shy away from using my proper title. But now that I know that I may actually get something out of it, I might try using it consistently going forward. Okay. So, we’ve talked about your side hustling. We’ve talked about how you’ve generated other extra income and how you’ve reduced expenses with your associated travel and so forth. And you told me when we started preparing this episode that all this allowed you to open a Roth IRA during graduate school, which, if you told me I’m being paid $1,000 a month and I’m going to be living in Lawrence, Kansas, I’d be like, “Good luck with that.”

36:46 Emily: You know, who would ever think that that would be possible? Yet, it sounds like through these different mechanisms that you were able to. So, tell me more about why you decided to start saving for retirement while you were in graduate school and why in particular you used a Roth IRA?

Why Start a Roth IRA in Graduate School?

37:00 Rachel: Yeah, absolutely. So, I’m in the humanities. I was a theater professional, theater artist for many, many years professionally before I decided to go back to school, years later. And because of that, I was a freelance contractor for a lot of my life–a lot of my working adult life. So, I was never hired on a permanent full-time basis. I was often hired on a full-time basis for the next three months, you know? And then I was again hired somewhere else for the next three months. And I think in the back of my mind, I kept hoping, one of these days, surely, I will get a job that will offer me benefits and savings plans and things like that. And after a few years, I realized, that’s not going to happen. And then when I went back to school, I didn’t know what my options would be there, either.

37:54 Rachel: I knew it was going to be a tight budgeting situation. I was not under any illusion that I would be–I mean, the idea of like saving for an IRA was completely out of my mind. But somewhere during the PhD–and at this point in my life, I’m like early thirties, 32, 33–and I thought, “If I don’t make this happen for myself, it might never happen.” We all know the statistics about finding a tenure-track job after you graduate. And I just thought I can’t keep telling myself, “Don’t worry. One day you’ll get that job. Don’t worry, one day you’ll get those benefits.” I thought, “Okay, it’s up me. It’s up to me to do it. So, I just need to really be creative and smart about how I’m saving money.”

Know Yourself to Choose Which IRA Works For You

38:42 Rachel: I was able to open a Roth IRA with Vanguard. Now, there again–and for those listening, PhD students who are great at research–just research around, figure it out. One thing I liked about Vanguard was that they seem to have, I believe–and I don’t want to misspeak because I could always be wrong. There could be information I don’t have–they seem to have kept their nose clean, relatively, through the recession. And that was one thing that really attracted me to them. I also spoke to friends and family that were involved in business and they all said, “Oh yeah, Vanguard’s a great company.” So, that’s how I chose them. I also just researched financial products and I said, “Okay, what makes the most sense to me?” I wanted something that would hold onto my money and wouldn’t let me at it. Because if I could pull it out without penalty, I probably would. And that’s just a personality assessment on myself. So, I wanted a financial product that I could put money into anytime. I wasn’t worried about being taxed on it. So, that’s why I chose the Roth IRA that I did. And, it would give me incentive to not take the money back out. So, yeah.

39:53 Emily: That sounds perfect. I think you had great insight there. If you don’t make this happen for yourself, it may not happen. Now, we know that you now have that tenure-track position. You’re one of the lucky few, right? But so many people, so many people currently in grad school or maybe in a postdoc or something–yeah, you don’t know what your job is going to be in the future. And kind of the way things are trending is, not only are pensions in many cases a thing of the past, even having what would be full-time benefits, like having access to a 403(b) or 401(k) or whatever, that is disappearing too as more and more people are entering the freelance market, as you said, or doing contract work. So, really, at some point, as you just said, you just need to make it happen for yourself because you can’t necessarily rely on an employer to do this for you anymore.

40:50 Emily: So, it’s a hard realization, but it’s one that if you do have it early on, like you did prior to graduate school or maybe during graduate school or during a postdoc for other people you know what, go ahead and get started. Because now is always kind of the best time to do it, right? Like best time to start saving for retirement. Well, that was 10 years ago, but the second best time is right now. So, go ahead and get started and don’t let, “Oh in the future things will be different hold you back from that.” So, I really love having the story from you of, “Yeah, my stipend was very small, not really sufficient for even a relatively low cost of living area. Yet, this is what I did to change this. I hustled in this way. I was super smart about deploying my credit score in this other way. I kept my travel expenses down in this way, and look at that. I was able to start saving for retirement based on all those strategies.”

Best Financial Advice for Early-Career PhDs

41:39 Emily: And now of course you have the full-time job and things are working out very well, it sounds like. So, love this story and thank you so much for this interview. And as we kind of sign off here, I just wanted to ask you, what is your best financial advice for another early-career PhD?

41:55 Rachel: Don’t underestimate your own creativity. One of your strengths and skills as a PhD student is researching. So, why not take that same skill and apply it to your financial life? If you had told me when I was in my MFA program, “Hey, guess what? In a few years, you’re going to make up your mind that you’re bound and determined to open an IRA.” I would’ve said, “That’s crazy. How am I ever going to save for an IRA on a stipend that I have?” And my other best piece of advice, I decided that because your loans are deferred while you’re in school, if you can pay on your loans while you’re in school, you’re only paying principal. So, that was my other goal throughout grad school. Financially speaking, I was bound and determined, even if it was $10 a month, that was still $120 less on my principal at the end of the year. So, however small it is, just chipping away at those student loans while you’re in school will really help you by the time you’re out of school.

43:01 Emily: I love both pieces of advice. Deploying your creativity and your research skills to your finances as well as your academic interests. And then, just because your student loans are deferred doesn’t mean you have to ignore them. Go ahead and start paying on them to whatever degree you can or are interested in. And/or do this retirement investing. Both of them are going to greatly benefit you by the time you finish up with graduate school and start having to make payments on the student loans. So, Rachel, thank you so much for this interview. This is really, really insightful and I enjoyed speaking with you.

43:34 Rachel: Yeah. Thank you so much for having me. It was great talking to you.

Outtro

43:38 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 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.

Insights from the Bargaining Table with a Graduate Student Union Leader

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In this episode, Emily interviews Mary Bugbee, a fourth-year PhD student in anthropology at the University of Connecticut. Mary tells the story of the grad student union at UConn, from its inception in 2013 to through the start of the second and current contract. Mary served on the bargaining committee for the second contract and gives her insights from the bargaining table into how the university views graduate student labor. She tells graduate students what they can do to support higher pay and better benefits at unionized and nonunionized universities. Mary also shares how her personal finances have benefitted from the strong union contract and her excellent financial advice for other early-career PhDs.

Links Mentioned in the Episode

grad student union bargaining

Teaser

00:00 Mary: The economic model of universities is exploitative. We’re cheap labor. A lot of us aren’t going to get tenure-track jobs. It’s designed this way for a reason. The problem is structural. Sometimes it’s not individual.

Intro

00:19 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 nine, and today my guest is Mary Bugbee, a fourth-year PhD student in Anthropology at the University of Connecticut. Mary tells the story of the grad student union at UConn, from its inception in 2013 through the start of the second and current contract for which she served on the bargaining committee. She gives her insights from the bargaining table into how the university views graduate student labor and what graduate students at unionized and non-unionized universities can do to support higher pay and better benefits. Mary also shares how her personal finances have benefited from the strong union contract and her excellent financial advice for other early-career PhDs. Without further ado, here’s my interview with Mary Bugbee.

Will You Please Introduce Yourself Further?

01:13 Emily: I have joining me on the podcast today, Mary Bugbee. She is a graduate student at the University of Connecticut, and she has been very active within their graduate student union. So, we’re going to hear a lot more about how that works from Mary. So, please, Mary, take a moment to introduce yourself to us.

01:29 Mary: Hi, and thanks for having me on this podcast. I am very passionate about unionization and that’s what I’ll be talking about. So, my name is Mary Bugbee. I’m a fourth-year PhD student at the University of Connecticut in Anthropology. I’ve also served as the vice president for the graduate employee union, UAW Local 6950, and then served as the president. And during that time, I also served on our bargaining committee for our second contract.

UConn Grad Student Union: First Contract

01:59 Emily: Yeah. So, when you started graduate school, which it sounds like that was during the first contract, what was the status at that point? What was in your offer letter for your stipend and the benefits? What was that first contract including?

02:13 Mary: Okay, so I was really lucky. I came into a university that had a unionized workforce of graduate employees. So, my benefits were really good starting off. I started in the fall of 2016, which was the second year of the first contract that they ever had. I was funded fully, which means for 20 hours a week, split between research assistantship and teaching assistantship. And that was $22,000 about for my nine-month academic year stipend. So, the University of Connecticut, in the Storrs campus, it’s not typical to have 12-month funding. People are usually funded at nine months, and then some people get additional funding. I also had a really good health insurance package. I pay $200 a year, I have no deductible, and my copays are $15, $20, depending on where I go. And it’s awesome.

03:14 Emily: That does sound really good. And you came in as a master’s student, is that right?

03:18 Mary: Yeah, so I got my master’s on my way to the PhD, and the way our stipends are set up is there’s a beginner’s level, a master’s level, and then the PhD candidate level. So, if I had come in with a master’s degree, I would have been making more than $22K.

03:34 Emily: Okay. And was that all part of the contract as well? That sort of graduated stipend level?

03:38 Mary: I believe the graduated stipend level was something in place before the contract, but it was maintained with what they negotiated. Instead of just having the same amounts for like many years in a row, we got raises from year to year. So, that was where the improvement was. So, not just a raise when you get to the next level, but also just a raise each year to help keep up with the cost of living.

Summer Research Fellowship

04:03 Emily: Yeah. So, one more question kind of about what was going on when you came in. You mentioned that your offer didn’t include summer funding. So, for you in particular, did you end up getting summer funding some of the years? Or how has that worked out in the years you’ve been there?

04:16 Mary: Yeah, so my department, the Anthropology Department, has something called a summer research fellowship. It’s basically guaranteed for first and second-year students to do exploratory fieldwork or language training during the summer. So, I had that my first summer and my second summer, which helped a lot. It still only covered my costs in the field, so I had to have savings to pay certain bills when I left for the summer. And since I was in Mexico, I couldn’t work. I didn’t really have any income. So, it was really important that I was able to save during the year. I did have side gigs.

Summer Side Hustling and Housing

04:54 Emily: Okay. Yeah, I was just about to say. So, the $22,000 in that first year that you received over a nine-month period–was that basically just paying for your living expenses during that nine-month period and then you had to side hustle to do the summer self-funding or how did that end up working out?

05:09 Mary: So, I’ve always had a side hustle or two. At one point I had technically four, but I’d say I just had one extra side hustle that first year. I got some per diem hours working as an administrative assistant at a local hospital. It was something I had before I started graduate school. So, I was lucky. I would say the stipend alone was enough to pay my living expenses. I lived with my partner at the time, a one-bedroom apartment. We split rent, although he paid a higher percentage of the rent. Had I lived with just a regular roommate and had a two-bedroom apartment. I think things would have been a lot tighter, because Connecticut is an expensive state. But, I never had a month where I was broke, and I was always able to put a little bit of money away. I’d say I earned maybe a hundred to 200 extra dollars a month with my side hustle.

Was Side Hustling Allowed Under the Union Contract?

06:04 Emily: Okay. I’m always very curious when people talk about side hustles. Is side hustling officially allowed under that first union contract? Or is it something that’s not really addressed?

06:14 Mary: So, the union contract has nothing about whether or not we can have outside employment. The graduate school at UConn actually governs that. And officially, you’re not allowed to work beyond the 20 hours a week in your offer letter. However, with advisor approval, you can. It really depends on your program and your advisor. I’m very fortunate to have a program and an advisor who has been completely okay with me having side hustles as long as I was meeting the academic criteria and progress goals. But some people at the University of Connecticut do not have the same luxury, and their advisors or their programs will give them crap about it if they find out. So, it’s really dependent on where you are in the university.

07:06 Emily: Yeah, that’s unfortunate. I definitely come down on the side of, if you’re doing what’s expected of you in your role as a graduate student, your advisor or whoever should not care what you’re doing outside of that, whether it’s a side hustle, whether it’s other stuff in your personal life. Especially when you’re being paid a stipend, like you were just saying, that’s like maybe adequate, sort of. Really, if you’re going to be making the choice between, “Okay I’m going to side hustle a little bit or I’m going to experience a bunch of financial stress,” and that can affect your work too. Thanks for adding that detail. So, how did you first get involved with the union and what was your role? I mean, you already mentioned a little bit what your roles were, but what were you actually doing?

Mary’s Role in the Grad Student Union

07:42 Mary: So, my research area is actually health policy. And I know a lot about health insurance. So, when I knew the contract was going to be reopened for bargaining–that was in 2017–I decided to get more involved. I wanted to be part of the bargaining committee and help with issues around health insurance. And then from there, I became super involved. I ended up becoming the vice president as well as a member of the bargaining committee. And from there, I’ve just been actively involved ever since. I did resign from the presidency this past May. So, I was the president for the past academic year, but I really need to focus on my research now. So, I’ve moved on and now I’m just a rank and file member and a volunteer. So, that feels good.

08:33 Emily: Yeah. But still doing outreach like this podcast.

08:36 Mary: Yes.

History of the UConn Grad Student Union

08:37 Emily: Okay. So, can you tell me a bit more about maybe the history of the union? When did it first come into place, and how did that work?

08:45 Mary: Yeah. So, from what I understand, there were multiple attempts at unionizing at the University of Connecticut over the years, but it culminated in 2013 when the university decided to just unilaterally change the health plan that the GAs were on to a higher deductible and just a more limited coverage network. So, not only was it more expensive, but it disrupted care for people. There were people who had to switch therapists or primary care physicians because they were no longer in-network. And that was the straw that broke the camel’s back. People realized that, without having a collective bargaining agreement, without having a union, the university could do that sort of thing at will, and they didn’t like being in that vulnerable situation. And on top of that, they were increasing student fees every semester. Wages were stagnant, the workload was becoming an issue. So, there were a lot of factors, but I’d say it was the health insurance. That was the last straw.

Health Insurance as a Common Catalyst for Unionization

09:46 Emily: That’s actually a little bit similar to the story that I heard out of the University of Missouri where–I think this was as a result of the passage of the Affordable Care Act–the university decided to stop offering health insurance or stop making it an included benefit. And so that again, as you were just saying was–and they did this like the day before the start of the coverage period. So, people literally we’re going to be without insurance the next day and finding out–I mean, that’s an extreme scenario. And so that again, as you were just saying, that was the catalyst there for a unionization movement. And I don’t know how quickly they got that into place, but yeah, please continue on with what was happening at UConn.

10:27 Mary: Yeah. So, from there there was a lot of organizing and these were mostly volunteers–or all volunteers at that stage–of people, graduate students who just decided that they needed a union. So, they got buy-in from other groups on campus, including faculty, the Graduate Student Senate. By November, December, 2013, they had selected United Auto Workers for their parent union. I think they had talked with a few others, but they decided UAW was probably their best bet. They have a really good track record in higher education.

11:00 Emily: As I understand, UAW does most, or virtually all, of the grad student unions, is that right?

UConn Breaks Higher Ed Record for Fastest Card Drive

11:07 Mary: I think there are a few AFL grad employee unions, but yeah, UAW I’d say might have the monopoly in higher education graduate employees and postdocs. So, from there, we had the card drive in February 2014 and we actually broke a record at UConn for fastest card drive in higher education organizing history. By early March, over 50% of graduate assistants had said, “Yes, we want a union. And yes, we want to be a member of this union.” By April it was recognized by the university and certified with the state labor board. Bargaining kind of got off on a bad foot. That June, the university decided they didn’t want to do summer bargaining. But they ended up bargaining from August, 2014 to April, 2015, and the first contract was in place by July 1st, 2015. And it was a three-year contract.

12:07 Emily: I see. So, really the initial phase of, “We want to get this in place, let’s get the buy-in.” That happened relatively quickly. But then the bargaining–I’m learning about this for the first time–the bargaining took quite a bit of time.

Bargaining: A Long, Arduous Process

12:19 Mary: Yeah. So, the process of bargaining can be very frustrating. The first contract is always going to take longer because you have to write everything from scratch. So, I was on the bargaining committee for the second contract. So, if you’re a member of the executive board you’re automatically on the bargaining committee. But there are also elections for district representatives so that there’s representation across the graduate assistant community. And then usually there’s a survey that’s done prior to bargaining, or there always is in our case, to elicit what people’s priorities are–to see what matters most to them. And then that’s used to define the bargaining goals. And the membership ratifies that and then bargaining can begin with the university. So, we started the second contract October, 2017 and we bargained until April, 2018. And it was a long, arduous process.

13:18 Emily: So, can you give me some examples of points that people brought up to you during the survey process that they wanted to have on the table for bargaining? Maybe some that ended up in the final contract and some that didn’t.

Issues: Health/Vision Insurance, Parking, Student Fees

13:29 Mary: Yeah, so everyone has always wanted vision insurance. We haven’t gotten that in either of our contracts, unfortunately. But you know, a lot of us wear glasses and contacts, so that gets brought up a lot. Health insurance–people want to keep the health insurance we had. People want wages. Parking is a big issue at UConn. It’s very frustrating. You have to pay to park and then you might pay for a permit and you still won’t be able to find a spot at certain times of day. I understand this is probably a problem at a lot of universities, but it always comes up with our members. But yeah, the student fees are another issue because each semester before we start, before we’ve gotten our first paycheck, we have to pay fees. And my understanding is that before the union was in place, fees were close to a thousand dollars a semester. Now they’re like $600, $700, and that’s with the university increasing fees during that time. So, we’ve kept it pretty low. So, the financial stuff is always big, but there’s other stuff too. And sexual harassment and discrimination protections, those are very important to our members as well.

Active Membership is the Key to a Bargaining Committee

14:41 Emily: I see. So, can you tell me a little bit more about how the bargaining committee works? You just said it was a six-month process. It’s arduous. What are some details there?

14:49 Mary: So you have the team–the negotiating team–and for us, our lead negotiator was an international rep from the UAW because none of us really have experience in bargaining. So, that’s one of the reasons you go with a parent union, because they have all those resources for you. So, he was the lead negotiator. We would try to meet as often as we could. The university wasn’t great about giving us a lot of time. We even met over breaks. Sessions could be from like two hours to four hours, and by the end, like all day sessions. We signed the tentative agreement at two in the morning. So, that’s the actual, active bargaining at the table. What’s most important for people to know about the bargaining process is that you need an active membership. You need to have collective power behind the bargaining team. So, our organizing committee all year long was organizing direct actions, was doing member outreach to educate them about the bargaining process and the trials and tribulations at the table. People would write op-eds for the campus newspaper or other news outlets. So, we were constantly putting pressure on the university from behind the scenes of the actual bargaining table. And that is the reason why we’ve gotten strong contracts both times. It’s because we have really active members who put so much time and energy into securing really good contracts.

Ways to Be an Active Member (Beyond Striking)

16:22 Emily: What does it mean to be an active member? You just mentioned writing op-eds. Did it come to really visible action, like strikes, or anything like that? Or maybe there are some intermediate steps.

16:32 Mary: Yeah, so, we never had a strike. Connecticut is a no-strike state, which doesn’t necessarily mean people wouldn’t strike, but we’ve never had to do that. I’d say being an active member is doing what you can with the time you have. And for graduate students, even the smallest thing can be a big ask. So, it was very inspiring to see people turn out for our big direct action at the end. We had a sit-in at the student union. We had three simultaneous sit-ins. We had some people at the student union chanting, then we had people in the Office of Institutional Equity because sexual harassment was a major theme in bargaining, and then we had people who went to the president’s office. Prior to that, we’d had a big sit-in in her office building a day she was offering office hours. So, like big, public, noisy, direct actions that called attention–not just to people at the university but people outside the university–to what was happening. And some of those people I had never seen at a membership meeting before. They weren’t regularly involved, but they turned out that day, and that was awesome.

Commercial

17:47 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.

Sit-ins Demonstrate Collective Power

18:51 Emily: So, how does something big and visible like a sit-in translate to the bargaining table? Are the people from the opposite side coming in, they’re saying, “Okay, okay, we see, we see”? What’s actually happening?

Mary (19:03): They see the collective power that we have. They see, “Wow, this group of GAs, they do really important work at this university. And if they were to ever not do that work, that would be a big deal.” So, even though we haven’t had a strike, I think that’s always on the back of the mind of the employer, because we do the day-to-day research, the day-to-day teaching. There are 2,200 of us at the university. The university wouldn’t be able to do what they had to do without us, so they have to listen to us. And when they see how much we care and how we’re able to band together in those crucial moments, then they take us seriously.

Changes from the 1st to the 2nd Contract

19:47 Emily: What were some of the changes from the first contract to the second contract that you worked on? Or, was it more about, like, maintaining the really good health insurance that was in place initially?

19:57 Mary: So, I can’t think of anything that we had to give away. But yeah, we wanted to maintain the health plan, and we also wanted raises. So, Connecticut is in a huge budget crisis right now, but we were still able to secure 2% raises year to year. The first contract, it was 3% raises.

20:18 Emily: So, that 2%, it’s basically the cost of living raise. Every year, you get another 2%. Is that right?

20:23 Mary: Yes.

20:23 Emily: During the length of that contract?

Hold On to Your Fundamental Rights

20:25 Mary: Mhm. And we fought tooth and nail to maintain a grievance procedure for sexual harassment and discrimination. The university tried to take that away from us. They tried to use it as a bargaining chip for economic items, which was to me just like completely despicable because that is a problem at UConn, as it is anywhere in higher education.

20:50 Mary: So, we fought tooth and nail to make sure that we still had an avenue of recourse in our collective bargaining agreement in cases of sexual harassment and discrimination. I think that might’ve been our biggest fight at the table. We also tried to get a full fee waiver. That’s what we try every time. We didn’t get that, but we did get an increase in our fee waiver. So, that was helpful. And we secured a relief payment for a new fee that went into place this year for a very beautiful multimillion-dollar student recreation facility they just built, and it’s $200 a semester. So, we get that money back in our first paycheck of the semester.

21:31 Emily: Okay. So, it’s still a fee that you pay, but then you get the money back. And that’s for the length of this contract.

21:37 Mary: Yeah. And the reason it was structured that way was because of how it was financed in bonds. They couldn’t legally give us a waiver. So, that was our work-around.

Union Fees Are Minimal and Worth It

21:46 Emily: Yeah. Interesting. Yeah, it’s good, I guess, to hear about all the different little levers that can be put in different ways. Although, as you said, some levers you don’t want to allow. I’m wondering, what is the fee for the union members? And then, are you totally confident that, based on, for instance, just the lowering of fees or not increase of fees, has that paid back immediately?

22:12 Mary: Oh, definitely. So, people pay 1.095% in dues, and it’s just taken out in paychecks. So, when I was at 75% funding one year, it came out to be like, I think around $10 a paycheck for me. I think for people making the highest amount you can make, it’s around $15 a paycheck. But you get that all back in your fee waiver, and your raises make up for it as well. So, for me, it’s a no-brainer. The union has been instrumental in making sure that I have a decent living wage. So, the least I can do is pay my union dues.

22:52 Emily: Gotcha.

22:52 Mary: And it takes resources to run a union, so that money is needed. You might have to go to arbitration, which costs money. We pay dues to the international UAW who provides us with resources like our lead negotiator during bargaining. And yeah, we also have to pay staff to handle grievances. So, it does take resources to have a strong union.

Remaining Insights About the Bargaining Table

23:18 Emily: Mhm. And are there any other insights that you want to share with the audience about what it’s like to be at the bargaining table? Or, what they might want to know if they are union members but maybe not active in the leadership at the union in their university, or maybe their university doesn’t have a union? Anything else you’d like to share from your unique position?

23:36 Mary: Yeah, so it can be a bleak place at the bargaining table because you come to learn that the university really only cares about its bottom line. And it was very upsetting for me to see them try to use, like, our right to have a grievance procedure for a sexual harassment case as a bargaining chip for economic items. It was very disillusioning, but it was also so inspiring to see what we were able to do as a collective. So, for people who don’t have time to contribute, like signing a card, that’s enough. That’s all what some people can manage. Like sign a card, pay your dues. Whatever little thing you can do helps your union. So, the bargaining is nothing without a strong membership.

What About Postdocs and Non-Employees?

24:24 Emily: Yeah, that’s good to hear that this work is not done by a few individuals who decide to volunteer a great deal of their time, but rather it’s those people, yes, plus they need to have the backing of at least a little bit of effort from a great number of the other workers. What I always wonder about with unions is, like they cover employees of the university–graduate assistants, TAs, RAs. What about the students and the postdocs who are fellowship recipients, who are not technically employees–or, at least for a period of time, they aren’t employees? Are they still benefiting from the negotiation that happens with the union?

25:01 Mary: Yes, absolutely. So, even though they can’t be classified as employees–some postdocs can, which I’ll get into in a second–they can’t be covered by collective bargaining agreement. But some of the things we’ve gained at the table, like our health insurance, that health insurance package is now available to those postdocs and to graduate students on fellowships.

Health Insurance, Not Fee Waivers, Benefit Non-Unionized

25:25 Mary: It’s subsidized a little differently, but it’s still pretty affordable. And I think there are a lot of studies that show when you have unionized employees at a workplace, the non-unionized employees can benefit as well. So, I’d say the health insurance is the big way that it’s benefited those folks.

25:44 Emily: I would imagine fees too? Or, is there a different fee structure for fellows versus employees?

25:50 Mary: So, they don’t get the fee waivers we get because they’re not employees.

25:55 Emily: So, it’s not like the fees have been lowered. It’s just, the fees are high, but you get a waiver for a certain amount of it. Is that how that works?

26:02 Mary: Yeah, exactly. And we always stand in solidarity with grad students when fees are being raised overall because we are in principle against any of that for anyone at UConn. But currently, unfortunately, they still have high student fees.

26:19 Emily: I see. But yeah, the health insurance seems like a big one. Especially what you described earlier, it seems amazing not having a deductible.

26:25 Mary: Yeah.

Unionization Effects on Personal Finance

26:25 Emily: That sort of leads into our second to last question here, which is how has being at a place that has a strong union affected your finances personally?

26:34 Mary: So far, I’ve accrued no debt in grad school. I’ve been able to live on what I’ve made, plus my side hustles, in addition to my TA work. So, I wouldn’t say I’m ever truly comfortable financially, but I do not feel financially vulnerable. I save. That’s why I have side hustles, so I can keep saving, and I don’t have to worry about a medical emergency. For me, that’s a really big thing because I have a chronic illness that’s in remission. It’s been in remission for a long time, but it can rear its ugly head at any moment.

27:12 Mary: And if I don’t have good health insurance, I could go into medical debt in like a week. Or medical bankruptcy, practically. So, I mean, the union is like the reason I went to the University of Connecticut, because I knew the health insurance would cover me in a worst-case scenario. So yeah, I’d say I haven’t been completely comfortable. I definitely took a pay cut from what I was doing before graduate school. But what I’m making allows me to live a decent lifestyle and to put money away.

Pro Tip: Look into Health Insurance Prior to Enrolling

27:45 Emily: I want to follow up on just that point about the health insurance, because I’m curious. So, when you were applying to graduate school and you received a few offer letters, how did you evaluate the health insurance that was being offered to you at that stage prior to actually enrolling?

27:58 Mary: So, I actually didn’t apply to that many graduate schools, and this was the only anthropology program I applied to. So, when I got the offer, I just took it. But I’m from Connecticut, so I knew about the unionization efforts, and I knew to look online and see about the health insurance. So, I don’t think it was mentioned in my offer letter, the health insurance, but the collective bargaining agreement was cited. So yeah, I didn’t really have to do a lot of comparison in the selection process.

28:29 Emily: That’s good to hear though that you were able to just find the information about the health insurance online. Because I know, not necessarily universities, but just in general with private health insurance, sometimes it’s really difficult to figure out what your benefits are, even once you’re actually enrolled in it. So, to do that as a step prior to actually being enrolled, it’s impressive. So, it’s good that they had that transparency that you were able to find the information that you needed right away. Yeah. So, that’s really good to hear. I mean, I’m happy for you, right? That you have a degree of stability and of course not having to take out debt at this stage is awesome.

Best Financial Advice for Early-Career PhDs

29:00 Emily: And so, final question, a standard one that I ask all my guests, is what is your best financial advice for another early-career PhD? And it could be related to something that we’ve talked about today or it could be something completely else.

29:13 Mary: So, individually speaking, this goes back to something you said earlier. I personally like to have side hustles and I think saving is really important. I prefer to have money in the bank and be a little bit more stressed out in terms of my schedule than to have more free time–well, “free time”–and no financial safety net whatsoever. So for me, I think that’s one of the reasons I haven’t had major issues financially in grad school. It’s because I do work on the side. And also, live within your means. But if you can’t–if you can’t balance a budget–don’t be so hard on yourself, because the economic model of universities is exploitative. We’re cheap labor. A lot of us aren’t going to get tenure-track jobs. It’s designed this way for a reason. The problem is structural. Sometimes it’s not individual, so don’t be so hard on yourself if you can’t make ends meet on your stipend. And also, that’s why you should be involved in your union if you have one. And if you don’t, definitely, definitely get involved in a unionization effort. Because even if it fails, it still lays the groundwork for future efforts. For me, it’s the most important thing for my finances in grad school–has been the union.

30:35 Emily: Well, there’s nothing I can add to that. Thank you so much for that statement and for this interview. It’s been wonderful talking with you.

30:41 Mary: Thank you for having me.

Outtro

30:43 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 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 shownotes creation by Meryem Ok.

How to Start Grad School on the Right Financial Foot

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Starting a PhD program is, professionally and personally, one of the most exciting times of life. You’re meeting people who will be your peers and advisors in the coming years whose research interest align with yours, getting acclimated to a new university and city, and of course starting a fresh school year. However, many first-year PhD students, as they’re going to happy hours to get to know their cohorts and buying their textbooks, are thinking to themselves: “Am I going to make it until my first paycheck arrives?” Financially speaking, starting a PhD program is one of the most challenging times of life as well.

The financial challenges of the transition into a PhD program are myriad and the resources are likely to be few. Moving to a new place and starting the school year are expensive endeavors, and sub-optimal decisions around housing and transportation may reverberate in your finances for years to come.

I present this article not to discourage you in what should be an invigorating and hopeful experience, but so that you have time to prepare for its unique financial demands. Starting grad school on the right financial foot means that you are poised for financial success throughout your PhD instead of reeling from the initial financial blow and playing catch-up for months and years to come. Here is what you can do in the months leading up to your transition into grad school to start in a place of financial strength.

grad school right financial foot

Draft a Budget ASAP

It’s vital to put your stipend offer in context as early as possible. The number may strike you as generous-for-a-stipend or meager, but until you know something about the local cost of living it is rather meaningless.

The best way to get an idea of how far your stipend will go is to start drafting a budget and use approximate numbers until you lock in various aspects of your living expenses. Two starting points are the Living Wage Calculator and the estimated room and board from your university’s financial aid office. Neither one of these numbers will prove to be totally accurate (I hope they are both overestimates of what you will pay) but it’s a start for the triangulation.

Your draft budget should include:

  • The income tax you expect to pay,
  • Your necessary expenses, i.e., housing, transportation, utilities, groceries, household consumables, clothing, etc.
  • Your discretionary expenses, i.e., restaurant and bar spending, travel, entertainment, etc.), and
  • Your education expenses, i.e., tuition and fees required to be paid out of pocket, course supplies, etc.

Further reading: How to Read Your PhD Program Offer Letter

To a degree, you can use your current expenses (if you track them) to estimate what your future expenses will be, possibly with an adjustment for the shift in the cost of living.

It’s quite difficult to drill down into the specifics of what you will spend in a job/life that you’re not yet in, especially if you are not currently tracking your expenses. Therefore, you can use placeholder percentages to help you estimate your expenses and guide your decisions. For example, the Balanced Money Formula states that you should not spend more than 50% of your net (after tax) income on all of your necessities together (including minimum debt payments). This is a challenging benchmark for grad students to adhere to, especially in high cost of living areas, but it illustrates how important it is to keep your necessary expenses in check to the greatest degree possible.

Further reading:

Thoroughly Research Your Housing Options

Housing is by far the largest expense in virtually every grad student’s budget, and first-year PhD students are expected to make this enormous financial decision with little to no insight into the local area. The result is that graduate students often overextend themselves in their housing costs, which are financially, logistically, and emotionally difficult to change.

Starting grad school on the right financial foot means locking in your fixed housing and transportation costs at a reasonable level for your stipend. The general rule of thumb is to spend no more than 25-30% of your net (after tax) income on housing. This guideline proves impossible for many if not most PhD students, who may be paid too little, live in an expensive area, or both.

Further reading: How Much of Your Stipend Should You Spend on Rent?

Particularly in those challenging housing markets, the best course of action to find the most suitable housing (even if you spend more than the guidelines) is to start your search early and thoroughly research your options. I recommend starting your research with a housing survey conducted by your university or graduate student association (if one exists) and senior grad students who are paid a similar stipend to what you will be (e.g., 3rd years and up). From these sources you can ascertain the price range you can expect for housing and potentially tips on the best locations, housing types, and even specific complexes or landlords to pursue.

Further reading: Your Most Important Budget Line Item in Graduate School and Why You Need to Re-Evaluate It

A note on on-campus or university-affiliated housing: On-campus housing is attractive for students moving from a distance because it short-circuits this whole decision-making process. But this type of housing was not all created equal. At some universities, the university housing is subsidized, which means there is likely fierce competition to live in it. At other universities, the university housing is more expensive than comparable non-affiliated housing. You won’t know whether university housing is a good deal and worth pursuing until you talk with current grad students.

Further reading and listening:

Go Frugal on Transportation

Alongside figuring out your housing options and eventually committing to something, you need to decide how you will get around town. If you don’t own a car, you might need to buy one. If you already own a car, you have to decide whether to bring it with you or sell it.

Owning a car, even without a car loan, is a very expensive undertaking. Beyond the cost of the car itself, you typically have to pay for insurance, parking, gas, registration fees, inspection fees, taxes, maintenance, and repairs.

If it is feasible to live car-free in your new city and you don’t currently own a car, I recommend trying to live car-free for your first year. You can always reassess and buy a car at a later time if you decide you want one.

If you decide to buy a car or keep the car you already own, make sure you globally assess your expected costs (not just the best-case scenario!) and write them into your budget. An expensive or newer car costs you more not just in the purchase price but in your insurance premiums as well.

Your transportation and housing expenses are necessary to fix in concert to a degree. If you decide to live car-free, you might choose to pay more to live closer to campus or on a convenient bus route. If you decide to buy or keep a car, you can offset some of those costs by finding less expensive and less convenient housing.

Create a Transition Budget

Most graduate students experience what I call the long and expensive first month of grad school, though I have noticed some universities are working to change this pattern. You must prepare for this long and expensive first month prior to starting your transition to grad school.

The expense of the first month comes from your move. First, the moving expenses themselves: your and your possessions’ transportation to your new city plus the cost of feeding yourself and so forth during that time. Second, the start-up expenses for your new place: first (and last) month’s rent and security deposit, deposits for your utilities, furniture, and stocking your pantry. Third, the expenses of a new school year/term: any money that you must pay to your university in a lump sum and the expenses associated with your coursework.

The long first month refers to the length of time from when you move to your new city until you receive your first paycheck. Personally, I showed up for orientation in mid-August and didn’t receive my first paycheck until the last day of September. Of course, that time includes all your regular living expenses, on the back of your moving expenses.

You want to be sure going into the long first month that you can come out the other side without racking up debt. Saving cash in advance to pay for the transition is the best solution, and a transition budget will help you estimate the total cost.

Build Your Financial Foundation Now

Because you have several months between now and your matriculation into your PhD program, you have the opportunity to establish your financial foundation prior to the challenges of this transition. By financial foundation I am referring to saving cash for the transition, saving an emergency fund, paying off debt, and/or investing – whatever is most appropriate for you right now.

If you currently have a full-time job, you have the most opportunity to shore up this foundation, but even as a student or part-time/gig economy worker, it is still possible to a degree. It will be well worth a few months of sacrifice, either in terms of earning more through a side hustle or spending less through frugality, to start grad school on the right financial foot instead of a few steps behind.

Further reading: Financial Reasons to Work Before Starting Your PhD

After you save the money you need for your transition into grad school, consider whether you can pay off any of your current consumer debt completely (e.g., credit cards, car loan, medical debt, IRS debt). While you can defer student loans while you are in grad school, these other kinds of debts will still require minimum payments even while you receive your stipend, so it’s worthwhile to attempt to knock them out completely.

Further reading:

If you spend the time and effort now on planning out your expenses and saving money, once you matriculate you will be able to focus solely on the stimulating new people and experiences you encounter instead of experiencing financial stress. Starting grad school on the right financial foot by locking in a good deal on housing and not allowing yourself to fall into credit card debt also sets you up for financial success throughout your PhD. An ounce of prevention is worth a pound of cure.

If you would like to me to work with you on navigating your financial transition to graduate school, please check out my financial coaching program exclusively for rising grad students.