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

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

Links Mentioned in the Episode

grad school financial success

Teaser

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

Introduction

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

Will You Please Introduce Yourself Further?

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

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

Financial Preparation Before Grad School

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

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

Balancing Coursework with Grad School Applications

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

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

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

Which Fellowships Did You Win?

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

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

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

Lessons Learned from Undergrad Personal Finance Course

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

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

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

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

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

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

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

Lesson 2: Make an Emergency Fund

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

Lesson 3: Time Value of Money

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

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

14:05 George: Yeah. Totally agree.

What Financial Changes Did You Make?

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

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

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

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

Choosing a Robo-Advisor

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

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

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

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

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

Commercial

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

George’s Financial Resources Document

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

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

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

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

Factors in Choosing a Graduate School

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

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

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

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

25:19 George: It was actually $500.

Consider Stipends AND Cost of Living

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

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

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

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

Housing Budget and Taxes

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

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

Quarterly Taxes on Non-W-2 Income

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

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

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

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

Ranking Housing Options

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

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

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

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

Long-Term Emergency Savings Goals

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

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

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

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

Any Other Goals for Grad School?

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

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

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

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

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

Outtro

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

How This Grad Student Fellow Invests for Retirement and Pays Quarterly Estimated Tax

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In this episode, Emily interviews Lucy Capano, a rising fourth-year PhD student at Washington University in St. Louis. Since she started her graduate program, Lucy has been funded by a non-W-2 fellowship and training grant, which has affected her financial practices of retirement investing and paying income tax. Lucy and Emily discuss what changed for 2020 to permit fellowship recipients like Lucy to use an IRA and how Lucy handles calculating, saving for, and paying quarterly estimated tax to the IRS. Lucy shares her motivation for pursuing saving and debt repayment goals while in graduate school and her surprising best financial advice for another graduate student.

Links Mentioned in the Episode

fellowship tax investing

Teaser

00:00 Lucy: That amount would automatically withdraw to that separate checking account that I didn’t really use for anything. And then at the end of three months, when it was time to pay quarterly taxes, I knew I had that amount and I was not worried about it. Right? I never even saw it in my regular checking. It only went into that secondary checking account.

Intro

00:22 Emily: Welcome to the Personal Finance for PhDs podcast, a higher education in personal finance. I’m your host, Dr. Emily Roberts. This is season six, episode nine, and today my guest is Lucy Capano, a rising fourth-year PhD student at Washington University in St. Louis. Lucy has been funded by non-W2 fellowships and training grants since she started her graduate program, which has affected her financial practices of retirement investing and paying income tax. We discuss what changed for 2020 to permit fellowship recipients like Lucy to use an IRA, and how Lucy handles calculating, saving for, and paying quarterly estimated tax to the IRS. Lucy shares her motivation for pursuing saving and debt repayment goals while in graduate school and her surprising best financial advice for another graduate student. Without further ado, here’s my interview with Lucy Capano.

Will You Please Introduce Yourself Further?

01:21 Emily: I’m delighted to welcome to the podcast today Lucy Capano who’s a rising fourth-year PhD student at Washington University in St. Louis, and we are talking about my two favorite subjects in one episode, investing and taxes, particularly for graduate students, maybe postdocs as well. So, Lucy, would you please tell the audience a little bit about yourself?

01:38 Lucy: Yeah, I’d love to. My name is Lucy, like Emily said, I’m very grateful to be here. I study neurodegenerative diseases and the age-associated causes that could be implementing them in the human brain. And we have a really cool protocol, but this is not about science. This is about taxes and budgeting because as a graduate student, we have a very limited income, and really, depending on where you are, you can have excess, or you can be really, really tight-budgeted. And it took me two-and-a-half years to really figure out where I needed to be. And so, why would I keep that information to myself? I think we should be sharing it.

Estimated Taxes on Non-W2 Fellowship Income

02:19 Emily: Yeah, I see we have a similar mission! So glad to have you on the podcast. So, your personal story, when you started graduate school, you had what I call non-W2 fellowship income. Can you talk a little bit more about that and why that was particularly financially challenging and odd at that time?

02:36 Lucy: Yeah, absolutely. As a first-year, I came in, and generally, that one is non-W2, and then I was immediately transferred to a training grant, which again means that I’m on a non-W2. So, that means my taxes that I would need to pay annually to the government are not taken out of my paycheck automatically. So, I get the full, gross amount given to me, and then I need to section portions of it to be able to pay estimated taxes. So, estimated taxes are due every quarter, April 15th. Oh my gosh. Am I going to get these dates right?

03:12 Emily: I have them. It’s mid-April, mid-June, mid-September, and mid-January, except in 2020 the first two quarters–so what would usually be mid-April and mid-June–have now been bumped back to that July 15th, 2020 annual tax due date. So, three types of tax stuff all due on the same day in 2020, but you got a little bit of a reprieve. So yeah, go ahead. It’s weird, right? It’s three–two–three–four months in length throughout the year. That’s why I also had trouble remembering this for like the first couple of years.

03:44 Lucy: The July has definitely been throwing me off because I’m used to June and now we’ve got July. So, when you get this money, how do you even make sure that you’ve got enough to pay per quarter? And do you want to do it all upfront, which you can totally do? Do you want to actually do it by quarter and hope that you remember? There’s a lot of ways to tackle it. You just need to find what works best.

Grad School Pay Frequency and Investment Goals

04:05 Emily: And so for you, are you being paid monthly? Or what is your pay frequency?

04:10 Lucy: We are paid on the last business day of the month. So, everything comes to me in one large lump sum. And that’s also slightly problematic, right? You need to be able to budget so that your entire month can be paid without overdoing it while waiting for that monthly paycheck to come in.

04:28 Emily: Yeah. Pay frequency is one of these really weird things about graduate school, where most people I think are once per month, but there are some people every two weeks or bi-monthly. And then there are some people on fellowship who receive an entire term’s worth of income two, three times a year. So, that’s a whole other sort of budgeting challenge. It’s nice that you get it up front, but it also causes problems. But that’s what I was wondering about when you mentioned paying the estimated tax. So, let’s talk a little bit more about estimate tax at the end of the interview and switch to talking about investing. So, when you started graduate school, what was your situation around investing? Was it a goal of yours, and were you able to do it?

05:06 Lucy: Yeah, so I moved here from an East Coast city. I’m now in the Midwest, and I love the East Coast, but it is not cheap. Just like the West Coast. And so, we pretty much didn’t have any disposable income. It was paycheck to paycheck. I was working both my lab tech job and a supplemental just to help kind of keep us afloat. And so when we moved here, the cost of living is a lot less. And so, we actually had a surplus after a certain bit of time. You know, after all the moving expenses when we paid those off. And the problem became, I always knew that I wanted to save for retirement and start savings, but I kind of didn’t know where to start. And in addition to that, I had never really had excess money before.

05:52 Lucy: And so a lot of money was escaping places that I didn’t really notice it was escaping. And that was kind of the big “Aha” moment for us was when we shifted. And I’m saying “we,” I live with my partner, we’ve been together for quite some time, was realizing that we had to make a decision. Do we want to go out to eat a bunch of times this month? Or do we want to have the retirement savings and the flexible savings accounts that will get us to the goals that we want, which is probably to move back to a coast, which again, not cheap. So, we need to do a lot of good saving while we’re here.

Retirement Investment: IRAs

06:33 Emily: So, was retirement investing in particular on your mind at that point?

06:38 Lucy: Yeah, so I had worked a number of jobs before coming to grad school. So, I had a 403(b), which is the nonprofit version of a 401(k), and I also had a Roth IRA from that same time. But when I became a graduate student in 2017, I knew that I couldn’t contribute with any of my stipend. So, I couldn’t do much other than build kind of the flexible savings that you keep within your bank account. And so, I knew I was just kind of in limbo and I was going to live there. And then in 2019, the SECURE Act was passed. And that changed the game for graduate students.

07:14 Emily: Yeah. Just to go back and explain that a little bit further because still a lot of people are kind of unaware of all these different laws and so forth. So, 2019 and prior, I think going back to like the eighties, the 1980s, what I referred to earlier, non-W2 fellowship income–so, any kind of fellowship training grant income that you get that’s not on a W2–at that point was not eligible to be contributed to an IRA. It was not considered taxable compensation or earned income. So, that was the situation until the SECURE Act passed. Not to say that everyone receiving that kind of income was totally unable to contribute because if you had a side hustle you could, if you were married to someone with taxable compensation you could, so there were some workarounds. But for plenty of people, it was just a hard “No.” If your stipend, your non-W2 fellowship stipend was your only income in the course of the calendar year, nope. An IRA was not an option for you. But pick up again, please with what the SECURE Act did.

How the SECURE Act Supports Grad Student and Postdoc Savings

08:06 Lucy: Yeah. So, the SECURE Act stands for Setting Every Community Up for Retirement Enhancement Act, which is great. I love that it ends on enhancement and then adds the Act back in. And what it says is that the term compensation shall include any amount, which is included in the individual’s gross income and paid to the individual to aid the individual in the pursuit of graduate or postdoctoral study. So, that meant that anything that I could claim as my gross individual income was now able to be used to be saved for retirement.

08:45 Emily: I think that was always a point of confusion prior to 2019, is that, wait, wait a second. My income as a graduate student is taxable? Like I have to pay income tax on this, and yet, I am not allowed to contribute to an IRA? It was very incongruous, hard for people to understand. It was there in black and white in the tax code. It was unambiguous, but it’s just a hard thing logically to come to grips with. So, it’s so great that the SECURE Act, which originally this Act was called the Graduate Student Savings Act, and then it was folded into the SECURE Act. I have a great podcast episode from last fall–two, actually–that I did on the SECURE Act’s passage. So, I’ll include those in the show notes in case you want to go back in time and listen to those. But yeah, end of the day, the great news is starting in 2020, people like you with only this type of non-W2 fellowship income, now you can contribute to an IRA again. So, have you been? How are the savings going?

09:37 Lucy: Yeah, great. We absolutely have started putting money into the Roth. It’s important to start early, right? In high school, we learned about compound interest and investing, and the earlier you start, the more you get out of it in the end. And so, when we talk about budgeting, we usually try to have around–I was taught about six months of your important and unmovable expenses, right? Your rent, your car, your car insurance, whatever else you may have that you know you have to spend monthly in a savings account. But then after that, there’s no point in continuing to build that up. That stuff should now move to retirement savings and kind of investment options. So, now we have automatic, biweekly–which is every two weeks because biweekly is a fun word–directly into the Roth IRA account for me and both my partner. And so, then I go in and I take those and I apply them directly to whichever funds I want to purchase with that.

Why Make Retirement Savings a Priority During Grad School?

10:38 Emily: Yeah. That’s awesome. Can you expand a little bit more about why it is important for you? Like why you have decided to make retirement savings a priority during graduate school? When, first of all, I mean, yeah, we need to acknowledge a lot of people can’t. You said that earlier. Some people are just plain not paid enough. That’s an unfortunate reality of some programs underpaying their students. But for the people who are able to, it might not necessarily be a goal. Maybe they want to do some other things with their money. So, can you expand a little bit more on why this early start is so important?

11:10 Lucy: Yeah. I mean, absolutely. It is definitely personal preference, right? Some people it’s just not on the radar and that’s alright if that’s what makes you feel comfortable. But for me, with the experience that I’ve had growing up and the experience that my partner’s family has had. I think it’s just so important to have that kind of a safety net for when retirement occurs. Both my parents are now retired. They go on trips whenever they feel like it because they have a really wonderful nest egg of savings and retirement funds that they can pull from at any time. And thankfully, they are very comfortable in that regard. And the earlier you start, like I said earlier, it compounds, right? So, every dollar that my Roth IRA makes, I have it reinvesting automatically. Because that’s just more money that gets to live there and build through the market value.

12:02 Emily: I, like you, worked only for one year before I started graduate school. And during that time, I embarked on learning about personal finance and I read this, “Oh, you have to save 10% of your gross income for retirement” rule. And I love rules. So, I was on it. It was challenging, but I was determined to do it. And I kept that up during graduate school. Thankfully, I, like you, also lived in sort of a moderate cost-of-living area and my stipend was fine for there. And so, obviously in more expensive places, as you were mentioning earlier, graduate student stipends don’t really get that much higher. So, it’s quite challenging there, but I was in a good position in that case. So, I was investing for retirement all through graduate school, as well as building up some other kinds of savings.

Investing in Your Future Positively Impacts Your Present

12:44 Emily: And I just have to make a plug for this in case anyone listening to this is not that motivated around it. Because what we found, my husband and I, who was also a graduate student at that time, not only is this like you’re saving and you’re investing for the far-off future, but it actually had an impact in the here and now. Well, after a few years after we really saw the balances building up, and that was actually during quite a strong, bold market. So, the compound returns were coming fast and furious. When we got out of graduate school, we had quite a good nest egg, both in our retirement accounts, and also in cash. And it actually enabled us to make more risky career decisions than we would have otherwise that were actually very well-suited for us. So, having that security of something that we had built during graduate school to be able to fall back on in case that risky decision didn’t turn out so well, that was instrumental in us actually making those decisions to go for our maximum career fulfillment, even at these riskier kinds of jobs. Obviously, I’m referring to my business, which is quite a risky endeavor, especially at the beginning. So, that’s kind of how I found that this mattered for me even decades earlier than I expected it to.

13:54 Lucy: Yeah, we have always known that we would like a house. And in order to have a house, you have to have a down payment. And in order to have a down payment, you have to have savings for it. Right? And there are certain rules surrounding specific savings or retirement accounts like Roth IRAs, where you can actually withdraw a certain portion for a first-time home purchase. So, there are absolutely benefits, and who doesn’t want to imagine being 70 and being like, “I’m just gonna fly to some beach and sit down and have a cocktail.” Right? That sounds really nice. It’s hard to imagine at this current time, but it is going to happen again.

14:34 Emily: True. We are recording this in May, 2020. Yes. Enough said there.

Commercial

14:43 Emily: Emily here for a brief interlude. The deadline for filing your federal tax return and making your quarters one and two estimated tax payments was extended to July 15th, 2020. I never expected to still be talking about taxes into the summer, but here we are. Postbac fellows, funded grad students, and postdoc fellows still need major help in this area because of their unique situation. I provide tons of support to PhD trainees preparing their tax returns and calculating their estimated tax. Go to pfforphds.com/tax to read my free articles and find out if one of my tax workshops is right for you. I have one workshop on how to prepare your annual tax return, and one on how to determine if you owe quarterly estimated tax. Both workshops include videos, supplemental documents, and live Q&A calls with me. Go to 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.

Strategies for Handling Estimated Tax

16:00 Emily: Okay. I want to return to the situation around estimated tax. If you wouldn’t mind explaining a little bit more about how, you know, you said earlier that your mileage may vary, people handle estimated tax in different ways. I’m curious, what is the best solution that you’ve come to for handling your estimated tax?

16:18 Lucy: Yeah, I was kind of pseudo-mentored by another graduate student, and he was always on this camp that he would save up four or five thousand dollars and pay his entire year’s estimated tax in January of the start of that year. And he would send in four different checks, one with each estimated tax document. And that would be it for the entire year. Now, at the time that he was trying to convince me of that, we did not have that kind of money. And so then I had to find some other way. And of course, I have an old checking account from when I was in high school. And so, what I decided to do was I calculated my estimated tax. Those forms look scary. They’re not that bad. Talk to somebody, talk to your friends, somebody knows how to do it. And once I had kind of figured out my estimated tax, I said, “Okay, well, this divided by four is, let’s say $400. And a quarter of the year is three months. Right? Okay. So, now I have $400, divided by three is, whatever. I can’t do math on the fly like this, but that amount would automatically withdraw to that separate checking account that I didn’t really use for anything. And then at the end of three months, when it was time to pay quarterly taxes, I knew I had that amount and I was not worried about it. Right? I never even saw it in my regular checking. It only we went to that secondary checking account.

17:38 Emily: Yeah. This system that you’re describing is absolutely the one that I recommend. Actually, I featured it in a past interview as well, which I’ll link from the show notes. The interview is with Lourdes Bobbio, and she is an NDSEG fellow. And so, this is exactly what she did to handle her estimated tax. It’s what I did in graduate school as well, and still do, because as a business owner, I also pay quarterly estimated tax. So, I think it’s a perfect system. It’s actually the one that I kind of recommend for everyone. Like you said, to pay all of your estimated tax upfront is a really high amount of savings to have on hand which would be unusual. So, that’s not for everyone.

PF for PhDs Resources on Estimated Tax

18:20 Emily: By the way, I do have a resource on estimated tax. I have a couple, so I’ll link them from the show notes, but if you also just want to go to pfforphds.com/tax, I have an article there called, “The Complete Guide to Quarterly Estimated Tax for Fellowship Recipients,” free article. And I also have a paid workshop. You can join anytime throughout the year. And I have videos that I’ve recorded. There’s like a spreadsheet that is included with that. And I also do live Q&A calls every quarter to answer any kind of final questions you have after you’ve gone through the material. So, that would be a great one to join if estimated tax is a concern for you.

18:53 Emily: As you said, Lucy, look at form 1040-ES if you think you can handle it, fine. It’s really not that hard for fellowship recipients, but I do know some people get a little intimidated. They want that live support. So, like you said, you know, you can turn to–I really hesitate, actually, to say to turn to a friend, because this is an area that people mess up a lot. It sounds like you got really good counsel, but you never know. You don’t know what you don’t know. Right? And so you don’t know if counsel that you’re receiving is good or not. So, I’ll just say, come to me, come to my site. I have the references for you. Yes, listen to your classmates, but trust, but verify. Let me put it that way. When it comes to tax and rumors running around graduate schools.

19:34 Lucy: Yeah. We just recently were talking about taxes with some of our upcoming, or now upcoming second years, asking them how they did and what they felt like, and how we can support them in the future. And they were like, “Oh my God, estimated taxes.” And then it was just like a flurry of papers and pens. And imagine that kind of cartoony instance. And it ended up half of them just decided they weren’t going to pay it because they weren’t sure what to do. And then two of them overpaid by $2,000, which I’m not really sure how that’s possible on our current stipend. Because I think we pay less than $5,000 a year. So, I’m not sure what they were doing for that one quarter, but they totally miscalculated, which is perfectly fine. But that is when finding a resource like Emily might be really helpful if you just don’t want to worry about it. You can go to her. I mean, I’ve never used Emily. I’m sure she’s great. But she seems to know what she’s talking about. And so, if you just don’t want to worry about it, if you pay a little bit upfront, you don’t have to worry long term.

Use Your School’s Tax Resources or Bring in an Outside Expert

20:34 Emily: Yeah. And I also love, you know, you mentioned before we started the recording that your university of WashU is providing–and in particular, your program is providing tax support in the form of workshops, which is amazing. Anyone who’s in a program in a school that does that, I definitely encourage you to attend one of those seminars. If no one is doing it and you feel competent, you can always try to start it doing some peer support in that area. And hey, I am also available and I have a live seminar that’s sort of a live version of the tax workshop that I just mentioned. So, if you want to bring in an outside person and you have a budget, I am available to do that. Because this is such, I mean, this is an area that, I cannot tell you the number of people I talk to every tax season who have maybe been surprised by, “Oh, it’s April and turns out I owe all this tax that I thought was being withheld from my paycheck, but it turns out it wasn’t,” that’s a really tough situation to be in.

21:28 Emily: I’ve talked to people who have gone three, four, five years of that happening and just wake up to the fact that they have all these back taxes. That is so tough. And you know, an ounce of prevention is worth a pound of care. So, we can just say again, if you’re on fellowship, if you’re on a training grant, look into estimated tax, it’s possible, you won’t have to pay them in your first year. Don’t forget about them. Look again in the second year, it could come up at that point. So, please tell your friends. Tell your friends about estimated tax. Send them this podcast episode. And as I was just saying, look for resources at your university. They may be there, or you may be able to start them or bring them in.

22:03 Lucy: And even if they don’t have them, you can let them know that it’s something that the students are interested in. Right? So, I’m the co-director of a student body group, and that’s what we do. We think students need this, so we advocate for that with the administration. And unless they know, they’re not going to be thinking about kind of dealing with this type of stuff.

Any Other Financial Goals?

22:25 Emily: Yeah. I think actually taxes at the graduate student level got a lot more attention after the Tax Cuts and Jobs Act passed because there were those couple months where we thought maybe tuition waivers would be taxed, so anyway, it got a lot of attention. I think after the Act ultimately passed, which thankfully did not have that provision in it, people were just a little bit more aware like, “Oh, okay, I have to deal with taxes. Maybe there are some resources out there that can help.” So, going back to your personal story Lucy, aside from the retirement investing, which is incredible and awesome that you’re doing that, you mentioned saving up for a house. Do you have any other financial goals that you’re going to be working on for the remainder of graduate school?

23:04 Lucy: I mean, really, it’s trying to find that financial stability that we couldn’t find while we lived on the East Coast. So, we were building that initial six-month-ish nest egg that you might want to refer to it as. Now, that’s done. So, we’ve shifted to building kind of the large expense nest egg, right? Like, the next time we have to buy a car, if our fridge breaks, right? Those things that you never want to have to think about, but they absolutely exist within life. And at the same time, we also obviously are working to pay off student loans. And we are working to invest in retirement. It seems like that’s not really feasible, and I’ll be completely honest, I put $50 in every week to that large expense. That’s not a lot, but assuming, and this is all assuming I don’t have a large expense for a couple of years, I’m going to have plenty of money in that.

Even a Little Bit (of Savings) Matters

23:58 Lucy: So, even a little bit matters. You might think $20 doesn’t matter to a Roth IRA, but it does build up. Slow and steady, it builds up. Can you imagine $20 every week over the course of however long your PhD is? I don’t want to say a number because it jinxes us all, but it’s really important to start kind of building these ideas because you don’t want to be caught out in the rain.

24:19 Emily: It sounds like you really have been able to accomplish a lot with the stipend. And I think your experience of moving from a higher cost of living area to St. Louis is really helpful in that way. Unfortunately, a lot of students go the other way and they end up in Boston, New York, San Francisco from a less expensive place. And it’s jarring that way, too. So, you put in your time in the higher cost of living cities and then experienced a bit of relief moving to St. Louis. That’s really great. And you know, I totally agree that even these small amounts of money make a huge difference given enough time. And as you were saying, the PhD is actually pretty significant amount of time. Over the course of five plus years, it can really add up, like it did for me and my husband. And so, anyway, I’m just really pleased to hear that you’re making your stipend work for you so effectively. That’s wonderful.

Best Advice for an Early-Career PhD

25:10 Emily: So, as we’re finishing up the interview, this is a question that I ask everyone who comes on the podcast, what is your best financial advice for another early-career PhD? And it could be something that we’ve mentioned in the course of the interview, or it could be something completely else.

25:23 Lucy: Yeah. I have to fully admit it’s an allowance. Like, I’m over 30 and I have an allowance. When we finally had kind of spare money, every month I would go on and get a graph at the top of my bank account that shows me my personal value and it would stay flat. And I’m like, “What are we spending our money on? This doesn’t make any sense. Okay, I bought this. Okay, I bought that. But it’s really not that bad.” So, we decided to implement an allowance. We’re two over 30-year-olds with an allowance. I mean, I can’t say that enough. And what we figured out was, “Do I really want to spend the money on this, right? Is this really what’s going to make me happy where I can’t necessarily save for retirement?” Which again is my goal. “Is this a thing that I need?” And it really showed us where our money was going, which was just little knickknacks and doodads. And after a year of that allowance, our personal value went up by like $3,000 because we weren’t accidentally spending $500 a month on whatever we felt like. And so, I recommend it. It’s hard and weird to say, but I recommend allowances. It keeps you a little bit honest about it. We have a post-it note on our fridge and we have to write everything we purchase that is for us specifically and not household.

Give Yourself an Allowance for Discretionary Funding

26:48 Emily: So, I want to make sure that I understand what you mean by allowance. So, what you’re saying is like, aside from the necessary expenses, and as you were just mentioning household joint expenses, allowance is, it sounds like something that is just for you as an individual. And it’s probably discretionary, is that right? And as long as you fit it within your allowance every month, or maybe you build up a balance over some time, as long as the purchase fits within that, you’re good to go. If not, you have to say, “Well, I need to wait on it.” Is that right?

27:16 Lucy: Right. Exactly. So, you know, let’s say you’re going to a conference and you need a new suit jacket. That does not count as an allowance. That’s something that’s important for your personal development. Let’s say there’s a really cute dress that has just come out from your favorite company. That is not something that’s related to household or even professional development. So, that’s probably going to go on allowance. I just spent actually the last of my allowance already on a gift for a friend for her birthday. I knew it was something I wanted to do. And so, that was in my budget for the month, or my allowance for the month.

27:55 Emily: Yeah. So, it’s kind of just another way of framing budgeting. Like it’s just a more like catch-all category and you’ve specified it just for you as an individual. I know you’ve mentioned your partner. I mentioned my husband. Like the whole couple money management thing, people do it a lot of different ways. And you really have to find what works for you. I know my experience in graduate school, my husband and I were both graduate students and didn’t have a lot of discretionary income. And so, we didn’t use the allowance system, but it was kind of because there wasn’t that much money left for an allowance after we were doing all of the goals and all the joint spending. So, thankfully we found a way to navigate that over time. But yeah, I think if we had had a little bit more discretionary income, having some autonomy over that money because we do keep joint finances, but having some autonomy over a portion of it, that’s a system that works very, very well for a lot of people. So, I’m really glad you brought it up. Well, Lucy, this has been just a delight and I’m so glad that you came on the podcast. And I hope to have a chance to meet you in person before too long. Because it sounds like you’re doing some incredible work there with your program at WashU. So, thank you so much for joining us and sharing your story and sharing your expertise in this area.

29:03 Lucy: Thank you for having me. It’s such an important component of life and graduate school for those that are interested. And I appreciate that you exist and you’ve been thinking about this and building things around it because it didn’t really seem like it existed when I first started.

29:19 Emily: Sounds good. Thank you so much.

29:21 Lucy: Thanks, Emily.

Outtro

29:23 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 involved. If you’ve been enjoying the podcast, please consider joining my mailing list for my behind-the-scenes commentary about each episode. Register at pfforphds.com/subscribe. See you in the next episode! And remember, you don’t have to have a PhD to succeed with personal finance, but it helps The music is Stages of Awakening by Podington Bear from the free music archive and is shared under CC by NC. Podcast editing and show notes creation by Meryem Ok.

This Postdoc Has a System for Debt Repayment That You Can Follow as Well

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In this episode, Emily interviews Dr. Suba Narasimhan, a postdoctoral fellow at Emory University. Suba and her husband each brought debt into their marriage, and once they both had full incomes, they decided to tackle it together. Suba presents a step-by-step plan for anyone at the start of a debt repayment journey. Emily and Suba discuss in detail how to handle credit card debt, including whether to pay credit cards off with student loans or 0% interest promotional credit cards. Suba doesn’t follow the debt snowball or debt avalanche methods exactly, but rather has mixed the two for a custom solution. Suba emphasizes the importance of being kind to yourself while repaying debt and adopting a nonjudgmental attitude toward your and your partner’s debt.

Links Mentioned in the Episode

Teaser

00:00 Suba: You have to think about this as part of your life. And if you have the ability to preplan and save some money, have a little bit of savings, and also just assume that maybe you’ll have to take on more loan debt. How much could you afford given whatever your loan burden is now?

Introduction

00:26 Emily: Welcome to the Personal Finance for PhDs podcast, a higher education in personal finance. I’m your host, Dr. Emily Roberts. This is season six, episode five, and today my guest is Dr. Suba Narasimhan, a postdoctoral fellow at Emory University. Despite maintaining a debt-free status until midway through her PhD, Suba eventually took on both student loans and credit card debt due to financial emergencies and adverse situations. When she started her postdoc position, Suba and her husband decided to tackle their debt head-on, even though it was very daunting and anxiety-producing. Suba presents a step-by-step plan for anyone who wants to eliminate their debt and shares her own decisions throughout. Listen through the episode to hear her encouraging words on maintaining a positive, nonjudgmental attitude during debt repayment. Without further ado, here’s my interview with Dr. Suba Narasimhan.

Will You Please Introduce Yourself Further?

01:23 Emily: I am delighted to have joining me on the podcast today, Dr. Suba Narasimhan. Suba will be telling us about her debt repayment journey, which I’m so excited to dive into that topic with her. So, Suba, say “Hi” to the audience, please.

01:35 Suba: Hi! Hi, Emily. Thank you for having me.

01:38 Emily: Thanks so much for volunteering to come on. I actually wanted to tell the audience how we met, which was a couple years ago. So, I gave a seminar at UCLA and Suba came up to me afterwards and she said, “I’m so interested in what you do. I kind of want to do what you do. Can we talk further about this?” And we did. We went and we had lunch, and we had this wonderful conversation. In fact, Suba is the one who encouraged me to start this podcast. So, if you’re a fan of the podcast, you can thank Suba for encouraging me at that point when I was really still considering whether it was something I wanted to go for. So, anyway, I just want to say that if you, an audience member, ever see me at your university or at a conference or if you hear that I’m coming, please come up and introduce yourself and identify yourself as a podcast listener or a mailing list subscriber or whatever you are and I would love to talk to you. If I have time in my schedule, I will hang out with you one on one if it’s at all possible. I love to meet people who are in my audience and consuming my content. I want to hear your insights. So, we’re getting Suba’s insights today. I’m really excited about that. So, Suba, will you please tell the audience a little bit more about yourself?

02:48 Suba: Absolutely. And I have to say, Emily’s a great lunch mate, so you all should totally do what she asked you to and come up and chat with her about finance. So, I am currently a postdoctoral fellow at Emory University, and it’s a really enjoyable experience. I am actually originally from the South and wanted to return to the South. And so that’s kind of how I ended up at Emory. I am in the Department of Behavioral Sciences and Health Education. So, that’s a School of Public Health Department. Yeah, it’s a great job.

Where Did You Do Undergrad?

03:31 Emily: Wonderful. And where did you do your undergrad? So, I know PhD at UCLA, and you’re at Emory now for your postdoc. Where was undergrad?

03:37 Suba: So, for my degree, you tend to do a master’s as well before you go on to your PhD. And so I did both my undergrad and my master’s at UNC Chapel Hill. Go Heels! I know, Emily, your rival school.

03:55 Emily: I was going to say, I think we were in the Triangle at the same time for at least a few years. But yes, I will allow that on my podcast. I’m a generous host. Okay. So, let’s talk about your debt repayment journey, which starts with a debt accumulation journey. So, tell us about that phase of your life.

Debt Accumulation Journey

04:12 Suba: So, I was really, honestly, I was very fortunate. I was really good with money for a long time and I was lucky to have had financial help from my parents during college and to have gotten both through my master’s and most of my PhD without accumulating any type of debt, consumer or student loan debt. And it was around the third year of my schooling in LA where I had a ton of unforeseen circumstances happen. So, I had some family illnesses. I had a lot of different difficult experiences happen and it was an emotionally trying time. And then it also became kind of a desperate time in terms of money. And even though I was working quite a bit, I just wasn’t totally making ends meet. And I think that that’s a very common experience for PhDs and can be one way that you really get into using credit cards or using student loans as a way to kind of just live your life. And being a PhD student is also a time in your life where you have to take a break from what might be a better-paying job to finish your degree. And I wasn’t one of these people, but I also think that there are a lot of people out there that probably are also very reliant on just their stipends to make ends meet. So, I think this is a pretty common situation to happen.

Importance of an Emergency Fund

05:44 Emily: We’re going to talk through how you’re remedying that situation. But just for anyone who hasn’t yet come upon that emergency situation in their life, if there’s any way that you can create some margin right now, some cash savings to help you kind of buffer through something like that, please, please take the opportunity to do so. So you don’t have to have this extreme reaction once an emergency does occur. And like you said, the thing about emergencies is that they’re rarely just financial, right? Something else has gone really poorly in some other area of life. Maybe it’s a huge emotional problem or a health problem or something like that. And so not only are you dealing with like logistics and emotions and just your routines being thrown off and your relationships, then you also have this financial component. So, at least what you can try to do for yourself, if at all possible, is to make the financial component of the emergency less of a thing so you can focus your energy on all these other areas of your life that need it at that time as well. So, that’s my soapbox. Okay.

Your PhD is Part of Your Life Journey

06:43 Suba: No, no, that’s a good soap box because one other thing I was going to say is I counsel a lot of students who are trying to enter PhD programs. And one of the pieces of advice I give them is something that I was given before I started my PhD. And that’s to think of your PhD journey or your PhD work as part of your whole life. And so, to also think about your finances at that time. So, one thing that was positive in this was that I had calculated out how much student loans I could take and feel a little bit less burden. So, the consumer debt I took on was unforeseen, but the student loan debt I had already pre-calculated what I thought was the maximum I could do in terms of payments if I got what I would consider just being a postdoc, honestly, in terms of finances is one of the lower-paying jobs that you can take because you’re usually on an NIH salary scale. So, that’s also my soapbox. You have to think about this as part of your life. And if you have the ability to preplan and save some money, have a little bit of savings, and also just assume that maybe you’ll have to take on more loan debt. How much could you afford given whatever your loan burden is now?

08:13 Emily: Yeah. I really appreciate you saying that because I think that if graduate students are not accustomed to taking out student loans, like maybe they haven’t done it since undergrad or they didn’t even do it in undergrad they might not think of turning to student loans in the case of some emergency expenses popping up. But it sounds like you did, like you took on some credit card debt, but then you also were using student loans to get you through this situation. So, can you talk about some of the advantages and also the disadvantages of choosing to use student loans versus just accumulating more credit card debt?

Student Loans vs. Credit Card Debt

08:47 Suba: Absolutely. I mean, one is that your interest rates–it’s always better to ask your university what type of emergency loan protections they have, which all universities do have that. And you can go to the scholarships and financial aid department and ask them about these short-term loan borrowing programs. And they are a lot more straightforward and they’re a lot more willing to work with you than a credit card company, which is a for-profit company, would be. So, I would say, that’s important. And the positive thing about student loans is that there are certain things, if you’re taking out federal loans, that you have access to which is the counseling components and the grace periods. And you can, eventually, if you do have student loans from undergrad or your master’s or some other type, you can roll them together and refinance them, and going through that is relatively painless.

09:54 Suba: And this is not necessarily something you can do with credit card debt. Right? What I would caution people against is if the student loans that you have to take out are private student loans, that then again gets you into this territory of consumer debt. So, I would really think about the terms and conditions of any private student loans that you might have to take out because they are often better than credit cards, but they still come with a lot of stipulations and issues. The problem with taking out a student loan is, unlike credit card debt, if there is something in the future where you have to declare bankruptcy, which could happen–happens to people for all kinds of reasons–you can’t discharge that debt at this point. And you also have to be really cautious if you’re thinking about maybe doing a public student forgiveness program. Sorry, public, what do you call it again?

10:52 Emily: Public service loan forgiveness.

Know the Terms and Conditions

10:54 Suba: Yeah. Which a lot of people in the medical sciences do. You hear a lot about people in medical and nursing programs, and there are a lot of people who are going to go into a nonprofit sector that think about that and it’s still a really viable option. It’s just you have to know the terms and conditions of that program going in so you can’t add to your debt burden without planning for how you might want to pay them off.

11:20 Emily: Yeah, I totally, totally agree with what you’re saying. I mean, when we’re thinking about credit cards versus student loans, federal student loans or private student loans, usually you’re looking at a lower interest rate for the student loans versus the credit cards. So, that’s attractive. But as you said, there’s a real danger point, which is if you ever get to the point where you are thinking about declining bankruptcy, you can’t get rid of those student loans. So, it’s a gamble, either way you go for it. But I really liked your suggestion of trying to access your university’s emergency loan system, which I don’t know about all, but I know that many universities do have that. And it’s certainly spreading, it’s a popular program that’s coming to more and more places.

Emergency Loans on Short Notice

12:00 Suba: And what I was going to say is you can also get those loans in very short periods of time. That’s why they’re considered emergency loans. So, if you know that there’s something that’s really looming on the horizon and even it’s maybe something that might happen to you next week, that could be something you can talk to a counselor about. And I think universities are really trying to be more sensitive about the fact that students, especially PhD students, are going through, you know, life challenges.

12:32 Emily: Yeah. And the thing about student loans is that they do take some time to apply for and acquire. So, it’s not a quick solution, but it might be something that you can set up if you know that you’re going to be holding debt for a longer period of time. I mean, not having to make payments on it, being in deferment while you’re still a graduate student is a really great benefit if it’s just not something that you are able to pay off in the moment. But of course, then you’re not paying it off. Right? So, the interest is accumulating. So, pluses and minuses there. It sounded like you ended up with a combination, then, of student loans and credit card debt.

Life Happens, Cost-of-Living Matters

13:02 Suba: I did, yeah. And one of the issues was, I was going through a lot of stuff and I just didn’t calculate how much I was spending. And I was having to deal with pretty significant emergencies that kind of made me have to travel and things like that. And so, that was how kind of this situation ended up happening. And then I also had some life circumstance changes that were great. Like I moved in with a partner. But you know, even that, any transition, honestly, is tied to money. And I’m living in Los Angeles. Another really big issue that might not be salient for people who live in maybe smaller places or less expensive places, is that the cost of living and especially the cost of rent goes up really quickly and sometimes without a lot of notice.

14:01 Suba: So, I also had to figure out my living situation and move apartments. So, I had a lot of things that really had nothing to do with my school life, which was going fine. And also, I did have a lot of financial help from school and from my fellowships and things like that. I was a fully-funded student. So, these are all, I think in an attempt not to scare anybody, but more to say we’ve got to think about the shocks and the issues that might come up and maybe prepare for them a little bit.

Inflection Point: Debt Talks

14:39 Emily: Totally, totally agree. So, thanks for going through that part of your story. At some point, you were no longer accumulating debt. In fact, you decided to turn it around and start paying that debt down. So, can you talk about the inflection point?

14:52 Suba: Right. And I think that was fairly recent. So, about a year ago, which coincided with me graduating from my PhD program, I also got married, which was great. And then I moved down here to start my postdoctoral fellowship. And my now husband also had a full-time job. And so, we said we think we want to start this next chapter of our lives. And one of the issues that we had sort of minimally talked about during our time together but hadn’t really deeply delved into was putting our finances together. And so, in having that conversation, we sort of said, “Hey, I think it’s time that we start to think really deeply and then have a clear plan about what we’re going to do and get rid of the debt that we are both carrying.”

15:46 Emily: Can you talk about how you went through that and how you tackled it, maybe for one of your peers listening here who is also facing a mountain of debt, a lot of different types of debt and doesn’t quite know how to start?

Tackling Debt Conversations

15:58 Suba: Yeah. I think the first step is to have a conversation and it’s usually one person says something like, “I’m totally scared about this debt, or I have so much debt and I don’t know what we’re going to do.” So, again, we opened up our finances to each other and said, “Hey, you know, we’ve decided to share a life together. What’s the most important thing that you want to do in the next five years? Like, what is the most important thing you feel like you want to spend money on? And why do you think, you know, getting rid of that debt would help?”

16:32 Suba: And so, having that discussion really made it sort of a positive and nonjudgmental environment to start having these conversations about money, which can be really anxiety-producing. And so, for me, making up these spreadsheets and having a plan and stuff was really energizing. I was like, “Okay, I am solving an issue.” For my husband, it was super anxiety-producing. It just created this feeling of like, “I don’t make enough money. I don’t know what to do.” You know? And so, also stopping at certain parts of this process. It may take, you know, more than one conversation to get to this point. And saying, “Okay, you know, the whole goal of this is not to stigmatize either one of us for bringing what we brought into the relationship, right?”

Dreaming, Not Blaming, Together

17:20 Emily: I like that – I just want to jump in and say, I really like that you started that conversation and are framing it around–I’m going to phrase it differently than you did–around dreaming together, right? Because as you just said, it puts this whole thing in a positive light. It’s not, “Oh, you know, sniping at each other, blaming each other for, you know, what’s happened in the past.” It’s, “No, like we’re standing together, we’re looking to the future. What do we want our bright future to look like? Let’s agree on that. And, okay. What are the steps we have to take to get to that point? Now, let’s tackle it.” But as you said, for some people it can feel like such a big thing to be working on. So challenging, like for your husband that it sounds like he wanted to shy away from it. Right? Whereas you wanted to charge toward it.

18:04 Suba: Yeah, it took different conversations to get to a point where–you know, and the honest truth is, he had less debt than I did. And so, the way I was feeling was, you know, a lot of blame and kind of shame. Or like, why, how did I bring this into our home, you know, kind of thing? And I think that that is a pretty common feeling for a lot of people. I don’t know anybody who’s had this conversation that hasn’t felt all kinds of feelings about it, you know? And so, I think from those big picture conversations you can also kind of talk about priorities. So, maybe one of you likes to travel more than the other. And so, setting up this idea of, “Okay, we’re going to decide that we want to take this many vacations a year or maybe we want to go to this many friends’ weddings a year, that’s important to us. We want to go home for Christmas or for New Year’s or things like that.” You know, like these are kinds of things that flow out of those conversations. What’s important to you, what’s your priority?

Allocating Money Toward Retirement

19:15 Suba: And we disagree on lots of things about spending money. It’s just we’ve allotted the parts of the money that we agree on so that we have this freedom, you know. So, one interesting thing about us is actually we don’t have a joint bank account. We still have separate bank accounts, and we’ve discussed maybe, but we have a joint savings account. And so, we’ve discussed how we allot money into our joint savings. And then we’ve also even talked about how we are going to allocate money towards our retirements because we look at those as shared money. And then after we’ve paid the bulk of our bills or whatever, the leftover that we haven’t allocated is our own money to spend the way that we feel. So, I think it’s also a balance between getting yourselves on the same page, making a shared priority list and plan, but then also saying, “Well, I don’t need to know and account for every dime that you’re spending. If you like to spend money on X thing and I don’t understand it, that’s okay. I don’t need to.” So, it’s not about controlling the other person, either.

Commercial

20:34 Emily: Hey, social distancers, Emily here. I hope you’re doing okay. It took a few weeks, but I think I have my bearings about me in my new normal. There is a lot of uncertainty and fear right now about our public and personal health and our economy. I would like to help you feel more secure in your personal finances and plan and prepare for whatever financial future may come. You can schedule a free 15-minute call with me at pfforphds.com/coaching to determine if financial coaching with me is right for you at this time. I hope you will reach out, if only to speak with someone new for a few minutes. Take care. Now, back to our interview.

Cataloging Debts

21:21 Emily: Okay, so first step was, “Let’s look at the picture. Okay. Let’s dig our heads out of the sand and look at what is the debt.” Okay. So, what did you do after that point?

21:30 Suba: Absolutely. We cataloged all the debts and the cataloging of this plan. So, essentially, we did create a full spreadsheet at this point of all of the debts, the interest rates, and what types of debt they were. So, was it student loans or consumer debts? And then when interest rates would either change or when they would kick in. And in terms of the consumer debt, one thing that I did was I called the credit card companies and I tried to get my interest rates lowered and be as nice as possible. And it did work for a few of them, actually, honestly. So, don’t be afraid to ask. The worst that can happen is that they say no and you can ask to be kicked up to people who have a little bit more power than maybe the receptionist that you talked to on the phone. And if you do it in a kind way, it works out. And then I also looked at the balance transfer offers that some of my credit cards had. And I would not say, like, open another credit card to do this. I would say, if you already have existing cards, many of them have balance transfer offers and they do charge a fee. So, weigh that fee against the amount that you save in interest by paying it off in the 0% period.

Strategically Using 0% Financing

22:54 Emily: I’m going to ask you a little bit further about this because I’ve never gone through this process myself. So, I want to know a little bit better. So, what you’re talking about is, you have an existing account open, and that account, you know, you see that they’re offering a 0% financing deal, 0% period. And so, what you’re doing then is you’re using that financing to pay off a different credit card balance, right? So, you’re sort of transferring the balance over to the other card that you had open that had that 0% offer. And then the offer is, “Okay, we’re not going to charge you interest for a given period of time.” Usually, it’s like 12 months or 18 months or something like that. What was it in your case?

23:28 Suba: It was 18 months. I only did the ones that were 18 or 22 months. So, the longest period. But you have to do this very strategically. What you don’t ever want to do is to be using these as another crutch so that you can kind of just not pay things off. So, I would then strategically plan to pay per month this amount off a few months before the end of the period. And so, that also gets to my next point. Part of after cataloging your debts, you have to catalog also the salaries that are coming in and the expenses. So, you have to see what your margin of expenses to your income is so that you can make a reasonable plan for your debt payoff.

Making the Minimum Credit Card Payments

24:23 Suba: You shouldn’t use any of these strategies in terms of your credit cards until you figure out, “Can I at least make the minimum payments on my credit cards? And then now I want to make more of a payment on either my credit card or my student loan.” If you’re having trouble making the minimum payments, I would absolutely say call your credit card companies and tell them, “Hey, I’m having a lot of trouble making my minimum payments.” Credit card companies want your money, and it’s better off that you don’t miss your payments because that can affect your entire credit history really negatively. So, these are, these are kind of things you have to do in tandem with one another. You have to catalog your debts and the times in which your debts need to be paid off. But then you also will have to catalog your expenses versus your income to see what’s a comfortable and reasonable amount for you to put towards paying off your debt every month. So, just to say, you had asked me before if I used a debt snowball versus debt avalanche. I think we are a little bit of a combination.

Debt Snowball vs. Debt Avalanche

25:35 Emily: Let’s pause and define that for the listeners who don’t know. I’ll just say, so in the debt snowball and the debt avalanche methods, which are these two very popular methods for repaying debt, repaying multiple debts, you usually pay the minimums on everything and then you make a list of your top priority to your lowest priority debts. And with all the remaining money you have to throw towards debt, you throw it at your top priority. This is in both systems. In the debt snowball method, the top priority is the debt with the lowest balance. And in the debt avalanche method, the top priority is the debt with the highest interest rate.

26:11 Emily: So, debt snowball, you move from smallest balance to largest balance, paying each one off in full. And then moving on to the next one. Debt avalanche method, paying the highest interest rate first. And then once you pay that one-off, completely moving on to the one with the next highest interest rate. The debt snowball method, the sort of reasoning behind it is that it’s very psychologically motivating to be able to cross that small debt, that first small debt off your list and you know, feel like you’re making a lot of progress and move on to the next one. Versus the debt avalanche method is mathematically the most optimal way to go about things. If you were to throw the exact same amount of money into both methods, the debt avalanche method would get you out of debt the fastest. So, go ahead and explain, between those two extreme models, what you actually did.

26:53 Suba: So, I’m still in the process of this. So, I also don’t want to say, “Look at me, I’m debt-free, and I could give you all this advice.” No, we’re still in the process of this and it’s been really fruitful for us. But we started off with the debt avalanche method. So, we wanted to pay off these highest interest debts first and within the reason of the amount of debt pay off that we could do per month. Right? And then when we would get to a certain threshold, so maybe it was a thousand dollars or $500, we would pay off that card or that debt in full. And that gave us, on some months, that would give you just like an extra boost. You know, it just makes you feel good to see that zero balance. And when you pay off a piece of a student loan, they send you a congratulations email. So, that doesn’t hurt too badly, either.

Prioritizing Interest Rates

27:46 Emily: So, I want to clarify because some listeners may have this question. So, if you have at least one, maybe multiple credit cards where you’re currently in a zero interest rate promotional period, does that become a low priority for you or is that still a high priority because the eventual interest rate is going to most likely be quite high? Can you talk a little bit about that?

28:09 Suba: So, I prioritize by the time that the interest rate would change and turn into the higher debt rates. So, say it was January 1st, I would make a plan where I would subtract two months from that, so November, and then I would calculate how much per month I would need to pay on that card to pay it off in full by that November. So, it doesn’t necessarily become a low priority or a higher priority. For some debts, you can’t change the interest rate, right? So, any of those debts would be the debts I would pay off the soonest if I can, or pay off the largest amount. I also thought a lot about how much debt I was carrying per card.

28:57 Suba: So, in one situation, I essentially didn’t have that many credit cards, right? So, one of my cards was more than 30% utilized, which is a lot, and that’s not very good for your credit score, either. So, my goal was to get that less, like lower than 30%. So, I prioritize basically based on the highest debt, and then when the interest rate would change from 0% to whatever it was. And it’s also really important, I don’t want any of your listeners to like go willy nilly and start moving their money around to 0% interest credit cards. That’s a strategy to be used when you need extra time and you have to really make a very clear plan that’s very reasonable to get that done and see what the fee is versus how much benefit you get. So, the fees always range from either 2% to like a minimum of a certain amount of dollars. So, you have to see what that is for each of your, you know, things. And I would definitely call credit card companies first and see if you can lower the interest rate before you change anything.

Automating Debt Payments

30:21 Emily: Okay. What’s your next thing that you did, or your tip for someone else facing this challenge?

30:27 Suba: So, I think, you know, I talked about how you should catalog your expenses towards your income and then figure out what’s a percentage of your paycheck per month that you’re going to put to your debt. And then you want to automate that. So, you basically want to be making a specific payment. And you can either do that, if it’s on your credit card, you can put the payment to a specific date or if it’s to your student loan servicer you can make sure that the check for your student loan comes out of your bank account at the same time.

31:02 Suba: So, you want your income to come in and then that money to go out almost immediately. So, you almost don’t see it, right? So, the reason I say, you know, and this isn’t like news, you know. Automating your finances helps so much because it lowers the stress of you having to keep track of it. But it also tricks you a little bit, psychologically. You never see that money after your paycheck comes in. So, you don’t feel like you have it, right? It’s already gone. It’s already been pledged to something. So, I think that helps.

31:39 Emily: I totally, totally agree. I’m a huge fan of automating, paying yourself first. Absolutely. Go ahead.

Paying Yourself First

31:42 Suba: Yeah. And, you know, there’s been a little bit of discussion sometimes too towards this idea of paying yourself first, right? And I think a lot about that. When you’re starting your first jobs after your PhD and even, you know, some postdocs and fellowships allow you to pay into their retirement system. If there’s a way you can think about putting some level of money per month into retirement, even if it’s just $50 a month or something like that. And that’s something that doesn’t seem astronomical. That’s also an important part of this calculation. And I think there’s a lot of debate on whether you should go whole hog and pay off your debt first and then think about your retirement. And people have all kinds of philosophies. I’m, you know, a moderate. And so, I think you have to live your life. So, you want to try to take advantage of the systems, the positive systems, that you have at the same time. So, my husband and I also looked at our retirement plans and factored in how much money we could put pretax and then put post-tax, if that was possible, into Roth IRAs. So, we thought about that in this whole system as well.

32:58 Emily: Absolutely. We are focusing on talking about debt right now, but once you get certain interest rates of debt eliminated, once those rates, you know, anything you have remaining is sort of in, as you were kind of just saying, a more moderate range, maybe six, seven, 8% or less. That’s the kind of time where you can start saying, “Okay, maybe we should do some retirement savings, not just the debt repayment.” But, to emphasize, if we’re talking about credit card debt, get rid of that credit card debt. Okay, go for that first.

Plan for the Future

33:25 Suba: That should be number one. Absolutely. And I think the next thing that we did then is to think about possible future changes and issues that could come up. So, you know, changes could be things like, “Well we have to prepare for making sure we go visit our family during the holidays or that we have to buy Christmas presents or things like that.” So, kind of trying to figure out what are the issues that we have had in the past that we didn’t prepare for? How can we prepare for them now? So that, you know, that’s an ongoing conversation that’s part of this.

34:08 Emily: I think that’s a really important thing to bring up, especially again for grad students and postdocs who don’t have large amounts of cash flow going through their bank accounts. Because there are going to be months where you have some larger expenses. So, to be able to save up that cash, to handle that at that time, that’s going to prevent you from, again, turning back to the credit card. So, it’s still kind of about debt repayment or debt avoidance to have that cash saved up, again for people who couldn’t easily absorb one of those large expenses in your monthly cash flow.

Small Changes, Big Differences

34:40 Suba: Absolutely. And even if it’s just, you know, a small amount that you put away every month. Again, we’re not having to think about these things in huge dollar amounts. I think sometimes what gets people a little bit down or can be very frustrating is this idea that these have to be very large amounts to make a difference. They don’t. Even if you have a buffer of a hundred dollars and you don’t put that hundred dollars on a high-interest credit card, that’s better. That’s why people have emergency funds. And so, it’s going to take a little bit of preplanning and it’s going to take some time, too. And even if you don’t have much of a buffer and that’s not something you’re able to do, that’s about the situation as well. So, that’s okay as well. It’s just you plan, you say, “Okay, when these credit cards are paid off or when the student loan is paid off, then that money that I’ve allocated towards the credit cards and student loans will now go to another priority.”

35:50 Emily: Exactly. And this goes back to the earlier part of our conversation where we were talking about looking forward into the future. You know, “What does my life, what do I want my life to look like this year, in the next five years, whatever it is?” Part of that is planning, “Okay, I’m going to be doing this type of traveling.” Guess what? Holiday gift-giving season comes up every single year at the same time. We know it’s there. So, yeah, just looking even ahead a few months or a year and just figuring out, “Okay, what are these life things that are going to happen?” They have to be part of the plan as well.

Positive Rewards (Treat Yo’ Self)

36:19 Suba: And part of this too is, just as you prepare for these issues that might come up, you’ve also got to give yourself positive small rewards. And so, what my husband and I did was we thought about things that we could give ourselves as a reward that didn’t involve us spending money. So, maybe once we got to a certain place, we went to like a new park in a city. And you can also prepare in your budget if there are things that cost money, like you want to buy a coffee every morning, you know, you put that into your budget. That’s your small reward for living life as a human being. I think my whole debt payoff philosophy is that you’ve still got to live your life, you know, in the most enjoyable way that you can.

37:12 Suba: Yeah. And another thing is, you can have a potluck with people without telling them the reason why. You know, like that’s another thing. Sometimes you can create a celebration and you don’t necessarily have to tell them, “Well, it’s because I paid 5% of my consumer debt off.” Right? Like that’s still a way to mark something positive and create a positive memory. And you know, things like that, they don’t cost a lot. And so, that also helped keep us motivated. So, we would say, “Okay, well we will save this treat until we get to this point.” And we tried to vary the different kinds of things that we would do.

Business Meeting Times

37:59 Suba: And one of the last things is we created kind of a business meeting time. So, I think one of the issues that happens when you start to get into this mindset of paying off debt or tracking things is that you think about it a lot. And especially if you’re somebody like me who really likes spreadsheets, you’ll be looking at it on your computer all the time and thinking about ways you could optimize. That’s not the best, I think, way to go about it because it can also become negative. You can start to look at the numbers and feel like things are not really moving that much. So, we would create a business meeting time when we would talk about these money-related issues or debt payoff issues. And then the rest of the time we would try not to bring it up. So, having that protected time to talk about it also meant that your entire relationship isn’t really consumed by it. And then also your own thinking throughout the day when you’re working and things are happening, you’re not thinking about it all the time.

39:10 Emily: Yeah, I totally agree with that. I’ve heard the strategy of having a business meeting with your spouse or whatever. And I’ve also definitely heard the strategy of compartmentalizing difficult subjects into, as you said, a time on the calendar. Like you know it’s designated that you’re going to think about it or you’re going to talk about it at that time. It helps it from bleeding into all the rest of your life. So, I really like your combination of those two ideas.

Make it a Positive Environment

39:31 Suba: Yeah. I think when it can kind of create anxiety and worry, and if anyone is prone to anxiety or worry, it could just like snowball into a lot. And you want to treat that time to be a time when other things are not as stressful. So, if you know, maybe like it’s after your kids have gone to bed or it’s on a Sunday because you know like on Sundays you don’t have as much to do, and you want to make that situation as positive as possible. So, sometimes we would like open a beer and sit down or something like that. Just like, make it a positive environment and start off the discussion in a positive way as best you can because these topics are difficult. And every month you may not see progress, right? So, there are things that happen. That’s the other thing. You may have all of these great plans in place and then one month you have to cut down a little bit on paying debt because you have another expense, you know? And so, those are kind of the times when you can have these conversations.

40:43 Emily: Definitely. Again, I love that you’re bringing up any way you can to put kind of a more positive spin on what is fundamentally a really hard situation to be in.

Be Kind to Yourself and Others

40:53 Suba: I guess in the last tip I would say, and I think I’ve said this throughout, is you have to be extremely kind to yourself. I think debt is incredibly stigmatizing. And I feel like I’m somebody who follows a lot of financial blogs and a lot of financial people online. And I think one of the things is we cannot be mean to ourselves or other people about their choices around money. Everybody’s choices are really, really different, and it’s very normal. Especially in this day and age when when people’s jobs are changing so much and maybe they’ve had different circumstances that the only real way to be empowered is to first normalize the fact that this is something that is part of your life. It’s something that happened to you because of a certain set of circumstances, but it’s not something that you can’t control. It’s not something that you eventually can’t get over, you know? And the only real way to be like, I think, empowered is to let go of some of the stigma, especially towards ourselves. We can be really unkind towards ourselves when we make, you know, choices that we don’t think are the best. We should be able to talk about these things a little bit more. And get advice from one another about how to tackle some of these things, even though our situations aren’t the same.

Best Advice for Early-Career PhDs

42:16 Emily: Yeah. And that’s exactly what we’ve done with this interview. And so, Suba, thank you so much for putting yourself out there. So, I like to end with this one question for all of my guests, which is what is your best financial advice for another early-career PhD? It could be related to the conversation we’ve had today, it could be something totally else.

42:34 Suba: I think my best advice is probably two things. One is try to plan, preplan, for changes in your life as much as you can, as best you can. And then the other is it’s never too late to start improving your finances. It doesn’t matter if you are $10,000 in debt, $200 in debt or a hundred thousand dollars in debt. You know, just figure out what your priorities are and see if you can align your priorities with what you want your financial life to look like in the future.

43:08 Emily: Yeah. I don’t want anyone to feel discouraged about debt numbers. I mean even you can look back through the archives, this podcast and I’ve had several interviews with people who are paying off six figures worth of debt successfully. So, it can be done. It does take work, it takes a positive attitude, Suba as you were just saying, it takes organization. But you know what, grad students and PhDs, we have some of those qualities in spades. So, this is definitely something that is tackleable for our community. And again, thank you so much for talking about this topic today on the podcast.

43:40 Suba: Yeah, thank you. Thank you for having me.

Outtro

43:43 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, please consider joining my mailing list for my behind the scenes commentary about each episode. Register at pfforphds.com/subscribe. See you in the next episode! And remember, you don’t have to have a PhD to succeed with personal finance, but it helps. The music is Stages of Awakening by Podington Bear from the free music archive and is shared under CC by NC. Podcast editing and show notes creation by Meryem Ok.

 

The Financial and Career Opportunities Available to National Science Foundation Graduate Research Fellows

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In this episode, Emily interviews Kelsey Wood, a National Science Foundation (NSF) Graduate Research Fellow who now teaches others how to write competitive applications for the Graduate Research Fellowship Program (GRFP). They discuss the decisions that new fellows have to make regarding when to start receiving the funding and the internship opportunities available. Kelsey also issues a warning regarding paying quarterly estimated tax and gives great insights from her course for GRFP applicants. At the end of the interview, Kelsey shares her best financial advice for current graduate students and postdocs.

Links Mentioned in This Episode:

Further Reading:

NSF GRFP finances

Teaser

00:00 Kelsey: I think that a lot of times the graduate groups or the administration will attempt to get as much free labor out of graduate students as they can, but there is actually a lot of money there to pay people, so I think a lot of times grad students need to be proactive in asking for money for things like leading workshops or teaching classes, TA-ing, et cetera.

Introduction

00:26 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 16, and today my guest is Kelsey Wood, a graduate student at UC Davis and National Science Foundation Graduate Research Fellow. We discuss the decisions that new NSF fellows have to make regarding when to start receiving the funding and the internship opportunities available. Kelsey also issues a warning regarding paying quarterly estimated tax. Throughout the interview, she shares her insights into how to best manage your finances as a fellowship recipient. Kelsey now teaches others how to write competitive GRFP applications, and she details some excellent strategies from the online course she developed. Without further ado, here’s my interview with Kelsey Wood.

Will You Please Introduce Yourself Further?

01:15 Emily: I am so delighted to be joined on the podcast today by Kelsey Wood. She is currently a graduate student at UC Davis, and she is also a former NSF GRFP fellow. And she’s going to be talking to us about that program and also the advice that she gives people in her course regarding applying successfully for the application. So, Kelsey, I’m so glad to have you. Welcome! Will you please tell the audience a little bit about yourself?

01:39 Kelsey: Sure. Thanks for having me on. I am a PhD student about to graduate in integrated genetics and genomics at UC Davis and I currently am studying plant pathogen interactions. I got my bachelor’s in biology from Reed College where I studied animal behavior and then I happened to get a job in the biotechnology industry working on potato disease resistance. And I really liked my time in industry, but I found that I was frustrated that I couldn’t pursue my own independent research questions. So, I realized I needed to go to graduate school.

02:14 Kelsey: And so, I applied for the NSF GRFP during my first year. Mostly due to peer pressure from a senior grad student who was a GRFP fellow, and he actually gave a workshop on the fellowship where he basically convinced everyone to apply. And I’m glad I did because I actually got it. And then after I received the fellowship, I decided take over that workshop and also encourage other people to apply and give them tips on how they can actually get it. So, I’ve offered a variation of that workshop for the last five years, and I did an online version last year. I held some free webinars that were attended by over 200 people all across the U.S., and then I also offered an intensive workshop with additional webinars, one-on-one and personalized editing services. Participants said that was really helpful in preparing their applications. And actually, out of the 10 people who submitted in the workshop, three of them got it this year and one honorable mention. So, I’m really proud of them and happy that I kind of helped people to get it.

Kelsey’s NSF GFRP Workshop Updates

03:18 Emily: That’s incredible. Oh my gosh. I would have loved to participate in something like that when I was early on in graduate school. Tell people right up front where can they go to find more information about that course?

03:27 Kelsey: Right now, the best place to probably get updates on what I’m going to be offering it–and I’ll also be posting a lot of the materials–is my Twitter. It’s @klsywd (Kelsey Wood), but without any vowels. So, K L S Y W D.

03:42 Emily: So, it sounds like you were a fellow between your second and fourth years of graduate school. Is that right?

03:49 Kelsey: Let’s see. I started the fellowship–it would have been in June, 2014–the summer before my second year. Yeah.

Major Decision Points for NSF GRFP Recipients

03:58 Emily: Okay. And so, what are the decisions? Okay, so let’s say we’re speaking to one of the people who has just found out that they received the GRF. Amazing, congratulations! But they’re faced with a few decisions either right away or during the course of their tenure. So, can you talk through–kind of give them a little preview, what are those decisions that they need to make, and what are some things they should consider as they’re making them?

When To Start Receiving the Stipend

04:23 Kelsey: Sure. So, I mean the first one is when to start receiving the fellowship stipend. So, you’re technically a fellow for five years, but you’re only receiving the stipend for three of those years and then the other two years you’re on tenure–you’re either on tenure or on reserve. Anyways, you only get paid for three years and then the other two years you just you have additional benefits that you can receive from the fellowship, but you’re not paid any longer. And you can start that at any time. What you really want to consider is potentially what other funding sources you might be encountering during graduate school. For example, there are a number of fellowships that you can get after you’ve passed your qualifying exams, which usually happen second or third year. So, if you think you’re going to be applying and getting those fellowships, it can be really good just to start the GRFP right away.

Consider Timing (and Adequate Payment) for TAships

05:14 Kelsey: And then the other fellowship will take over once your GRFP funding runs out. Some really lucky people got multiple fellowships, actually, right at the beginning. Somebody I knew got the GRFP and the Ford fellowship this year, actually. So, they need to decide which ones, what order to get those because you can’t get them both at the same time. But that’s a pretty lucky problem to have. I would say that. And then the other thing is, some people have to do TAships in order to satisfy a degree requirement. And you can’t do a 50% TAship while you’re doing the GRFP. That’s not allowed. So, you might want to maybe get that out of the way first so you can pass your qualifying exams and have that TA under the thing. What I did is I actually TA-ed for free. But in retrospect, I don’t know if I would make that same decision again because it was a lot of work, and I don’t know. I’ve kind of changed my feelings on just doing things like volunteering and for free because there actually is–I think that a lot of times the graduate groups or the administration will attempt to get as much free labor out of graduate students as they can. But there is actually a lot of money there to pay people. So, I think a lot of times grad students need to be proactive in asking for money for things like leading workshops or teaching classes, TA-ing, et cetera. So, that’s what I found. I started asking for stipends for my workshop and I got them. I started asking for stipends for TA-ing grad level classes. They weren’t offering them before, and I started to get them. So, I think in retrospect I maybe would have tried to get paid for a TAship to meet my degree requirements and then taking the GRFP.

07:09 Emily: It is kind of strange that universities have different policies around who gets paid for doing what exactly, because TA-ing–sort of similar to your situation, but–in the department that I was in, in graduate school, we had what they called, a graduation requirement to TA for two semesters, and it was not tied to our stipend. So, we were all being paid in some manner, either research assistantship or on fellowship or something, but we just had to do this TA work on top of it during a couple of semesters. So, that was the way they structured it. It wasn’t tied to our income. But in other places, of course there are some people who are TAs and that’s their stipend and that’s their funding and that’s the source of it. But then there is even another option that I’ve heard of which is essentially sort of being hired as an adjunct, as a graduate student. So, it doesn’t have to do with your base stipend. That could still come from a fellowship or research assistantship or whatever else. But if you take on an additional class as a TA or even as the lead instructor, you could be paid like an adjunct would be paid. So, different places do things different ways.

Check with Your Advisor About Research Grant Cycles

08:11 Emily: But I think to your original point about deciding, “Okay, when do you want to be paid for these three years when you’re in those three years of having the GRF?” You said that you should think about, “Are you going to be applying for different kinds of fellowships post-quals or post-prelims? Are you going to need this TA thing?” You could potentially get it out of the way first and have your funding come from there, initially. I would also want to throw in there, maybe ask your advisor about research grants, and are they at the end of a grant cycle, the beginning of a grant cycle? Because that could also play into it. You don’t want to take the fellowship when your PI has tons of money and then, you know, three years later, maybe there is no funding there for you. So, that’s a potential risk too. So, it’s just kind of being open about what are all these financial factors within your department, within your group, that could play into this.

09:03 Kelsey: Yeah. And actually, that’s a really good point. Because for a lot of people, getting the GRFP actually influences what lab they can join because you’re coming in with your own funding. So, you might be able to join a lab that you wouldn’t have been able to join otherwise. And in that case, you’d probably want to start using your funding right away. And then, you know, you can essentially help your PI get other grants that will take over once the funding runs out. So, that’s a big benefit.

Are You Listed as a Dependent on Your Parents’ Tax Return?

09:33 Emily: I wanted to add one more point. It’s tax season right now. So, I’m thinking a lot about taxes. And so, this weird thing happens with fellowship funding when you’re under the age of 24. I don’t know how old you were when you first started, were you under 24?

09:48 Kelsey: No, I don’t think so.

09:49 Emily: Okay. Yeah. Because you had had at least one year of work experience. But if you’re starting when you’re 22 or 23, anytime that you have fellowship income in a year when you’re age 23 or younger, some weird stuff can happen with your tax return. Namely, your parents might be able to have more of a claim on you as a potential dependent on their tax return, which is not good for you if it turns out that way. And secondly, you might be hit with this weird high tax called the “Kiddie Tax.”

10:16 Emily: And so, I don’t want to go into all that right now, but if you go to my website, pfforphds.com/tax, there are articles there about both of these issues. But my point is just when you have fellowship income and you’re under the age of 24, sometimes it can have these weird effects of making you pay a lot more in tax than you would normally if you were over the age of 24. So, to me that’s just another factor that I want to throw in there of, “Hey, if you’re under the age of 24, maybe consider delaying a year until you actually turn 24, and then take the fellowship if your alternative is having a research assistantship instead, which is W2 income, which is treated somewhat differently tax-wise. So, more details about that if you want to talk with me about it or read about it more, but I’ll just throw that in there for those of you on the younger side.

25% TAships Possible During GRFP

11:00 Kelsey: That’s a really good point. Oh, and I actually thought of one more thing regarding TAships, which I think a lot of people don’t know–or I didn’t realize at first–is that it usually is possible to get a 25% TAship while getting the GRFP. So, that might be an option if that will satisfy your degree requirement. And the other benefit is that you actually get paid on top of the GRFP additional money for the 25% TAship, and that’s allowed within the GRFP rules. So, it’s just something to consider. I did that for one quarter, and it was really nice.

Financial and Career Opportunities for GRFP Recipients

11:34 Emily: Yeah, I love hearing all of these different ideas. Okay. So again, speaking with a new fellowship recipient, what are some of the financial and career opportunities that come along with receiving the fellowship?

11:46 Kelsey: Well, probably the biggest one is just the fact that the stipend is a lot higher than most standard stipends offered for grad students. And so, that makes a really big difference to be able to afford cost of living, which has really gone up in a lot of places, especially in California. I’m sure other places as well. And then another benefit for your career is that winning one fellowship usually leads to winning additional fellowships and awards. And I think one reason for this is that the reviewers look at your CV and they’re like impressed that you have the GRFP so they are more likely to give you these other awards. And then the other reason is that I think that just the practice of writing the fellowship in grants, you become better and better at it. And so you’re able to write more convincing applications.

12:35 Kelsey: So, for me personally, after I got the GRFP, I won research funds from UC Davis. I got like three or four travel awards for conferences. I got the USDA predoctoral fellowship. And then I also applied for a Dean’s award for mentorship and got that. And I’m pretty sure the GRFP helped me a lot in that. And also writing these and teaching classes on fellowship writing probably helped me also become a lot more convincing. So, that’s a huge benefit for your career.

Get the Snowball Rolling, Start Early

13:05 Emily: I’ll actually add in there that I think it makes a ton of sense, like what you’re doing with your course, or the students in your course, it makes a ton of sense to focus and put so much effort into these really early funding applications like before you enter graduate school in your first, maybe second year of graduate school. You don’t have to say, “Okay, this is going to be my bar for every application I’ll ever do.” But as you said, if you can get that snowball rolling of receiving awards right away in the start, it does make the rest of it easier and is very impressive. It’s a wonderful fellowship to win. So, I’ll just say, go take Kelsey’s course. Or somebody else’s. Just get these resources and make sure that you are putting as much effort as you possibly can into these early applications. And like you said, the skill of writing the application itself, that is something that carries over into the future. So, yeah, when you have your time before you’re deep into your research and you’re still doing your classes or whatever, make time for this. Make it almost like a course in your schedule in that semester that you’re applying. Because it really is worthwhile to put in the effort.

14:08 Kelsey: Yeah. And a lot of people don’t want to apply, for example, because they just don’t think they’re going to get it, for various reasons. And I encourage them just to do it anyways as an exercise. And usually by the end of it, I always ask my students during the course evaluation if they thought that the class was worth it, even if they don’t get the fellowship. And like 95% of them say yes, just because it’s the skill, it’s writing about your research. A lot of times if you’re actually writing about your real research, you can use that GRFP application in other grants or your qualifying exams, which is really useful. So yeah, definitely a good skill to get and to get early. And then if you get it, like you said, it’s just a snowball effect.

Internship and International Travel Opportunities

14:54 Kelsey: I was going to mention just the internship and the international travel opportunities that GRFP fellows are able to apply for. So, I didn’t actually apply to either of these, but I have known people who have done the Graduate Research Opportunities Worldwide, the GROW program, and that just allows you to do like three to six months research abroad. You identify a host in another country and then you apply for it. And I heard it has around like a 50% acceptance rate, and they fully fund your travel and living expenses abroad. So, it’s just a nice way to kind of get some international experience, maybe learn a new technique, or use some instrumentation that’s not available at your home lab. And it’s just another fellowship you can add to your CV.

15:49 Emily: I’m also thinking that that’s just an incredible thing to be able to talk about in future job interviews, or whatever. Just having a different kind of experience that broke up graduate school a little bit. Expanding your network, you know, seeing things from another perspective. It’s in the name, right? It’s a real growth opportunity.

Even Without the GRFP, Talk to Your PI About Collaborations

16:08 Kelsey: And I mean, something to consider too is even if you don’t have the GRFP, if your PI does have enough funding, this is something you could probably set up on your own basically doing research in a collaborator’s lab internationally or in the U.S. So, I think it’s something to consider just to diversify the experience that you get and you can talk to your PI about it and it might be something they go for.

16:34 Emily: Yeah. I know actually one of my labmates while I was in graduate school did the Whitaker Fellowship. I don’t know how subject matter-specific that is, but he was able to spend nine months in East Asia. And yeah, I think it was a great experience.

16:48 Kelsey: Yeah. The NSF has another one too that I think is open to all, not just GRFP fellows, that’s just a travel abroad or research abroad fellowship. There are other ones out there too. So, it’s definitely something to look out for and apply for.

17:03 Emily: Okay. So, that was the GROW fellowship, but there’s another internship program, right?

17:07 Kelsey: Yeah. So, there’s the GRIP program. So, it’s the Graduate Research Internship Program, and that one you do research at a federal agency. I don’t know all the ones, but I know like you can do research in the Smithsonian for example, any of the agencies, basically the governmental agencies.

17:28 Emily: That also sounds like an incredible career opportunity.

17:32 Kelsey: Especially if you want to go into government research. You know, I think that nowadays more and more graduate students are realizing that the academic path of being a professor–there are so few opportunities for that and so many graduate students trying to get those, that a lot of people are considering alternative career paths like industry or government jobs. I had a lot of people who took my class who really wanted their end goal to be to work for a governmental agency and do research in that respect. And actually the NSF really encourages that for GRP applicants. So, I tell people, if that’s their career goal, to write about that in their application.

Timing of Internship Programs During Fellowship

18:16 Emily: Just to add on to that, I think having outside work experience before you actually finish your PhD is incredible for finding whatever your next job is. Even if you decide to stay within academia. Again, it gives you multiple perspectives, broader network. But a question I have about the internship programs, is that something that you have to do during your funded years or is that something you can still do on the remaining two years?

18:39 Kelsey: Yeah, that’s a good question. So, both the international program–the GROW program–and the internship program can be done while you’re on reserve. So, while you’re not receiving the stipend. So, it has to be done within the five-year period of when you first start the fellowship. But yeah, that’s really one of the benefits. And I think the GROW is really something you’d probably want to do towards the end of your graduate career–probably both programs–because one, it’s additional funding? So, maybe your GRFP funding has run out and now you can get some more funding for your travel and living expenses.

Design a Custom Internship

19:16 Kelsey: And then the other thing is that you really are probably better able to identify a lab or a governmental agency that would be a right fit for your research at that point. And actually something else regarding internships is, you know, there was a program at UC Davis that’s like the biotechnology program. It’s like a degree, an “emphasis,” and they require that you do an internship as part of the emphasis. But one thing I realized is, even if you’re not in a program like that or even if you’re not a GRFP fellow, you can a lot of times arrange an internship in industry towards the end of your graduate career. Potentially, the company will fund you to do that, too. And it can be a really good chance to explore these career opportunities.

20:07 Kelsey: A lot of times, if you end up doing a good job, the company will be really excited to hire you and it kind of lets you trial industry or trial a company and maybe contribute something else to your research, too. So, I just have realized that a lot of times you can kind of design your own programs. Obviously, you want your advisor to be on board with this, but a lot of times, especially if you can get funding from the company, then they’re going to be very happy about that and they also want to see you grow in your career. So, I think that’s something that people should consider. Even if you’re not a fellow or even if you don’t have an official program, you can kind of craft your own internships during graduate school.

20:51 Emily: Yeah, I totally agree. I think it’s one of the most powerful things you can do for your career, prior to finishing your PhD, while you know you have something to go back to after the summer ends, or whatever. I actually did a science policy fellowship that was three months, the Christine Mirzayan policy fellowship. It’s at the National Academies. And I did it after I finished my PhD. I applied basically around the same time that I was defending, but it’s open to current graduate students as well. In retrospect, sort of like you, I wish I had done it while I was still in my program and I think it would have informed some of the decisions that I made as I was finishing up. So, internships, great for everyone. I know not everyone thinks that internships are for them. I’m from an engineering field, so it’s sort of more normal to think about doing an internship. And of course in computer science or similar fields like that. But I think it’s expanding and it should expand more to other disciplines where it hasn’t been a traditional part of the PhD path.

Commercial

21:50 Emily: Hey social distancers, Emily here. I hope you’re doing okay. It took a few weeks, but I think I have my bearings about me in my new normal. There is a lot of uncertainty and fear right now about our public and personal health and our economy. I would like to help you feel more secure in your personal finances and plan and prepare for whatever financial future may come. You can schedule a free 15-minute call with me at pfforphds.com/coaching to determine if financial coaching with me is right for you at this time. I hope you will reach out, if only to speak with someone new for a few minutes. Take care. Now, back to our interview.

Financial Advice for Fellowship Recipients

22:36 Emily: So, let’s broaden this line of questioning a little bit. Not just for people who have just received the NSF GRFP, but people who have received it in previous years who are still receiving that higher stipend. And maybe other people who’ve received outside fellowships that also have some stipend augmentation based on that. What’s your financial advice for people who have received one of these lucrative outside fellowships?

File Estimated Quarterly Taxes (NOT Yearly)

23:00 Kelsey: Yeah, so I think the biggest pieces of advice I have are regarding taxes and savings. And so, the thing you should do immediately is start to file your taxes quarterly instead of yearly. And you can estimate how much taxes you’re going to have to pay quarterly so you can start to save up. My personal sob story is that I did not do this the first year and I ended up filing my taxes and I owed about $5,000, which I didn’t have saved up. So, I ended up having to do a payment plan with the IRS which charges interest, actually quite a bit of interest. So, I ended up having to pay way more in taxes than I would have if I had just started filing quarterly. So, do that right away. I know taxes are not fun, but it’s actually not too hard to calculate if you’re only getting the stipend income, and that’s way better than having to owe it.

23:56 Emily: Actually, let me pause there because this is one of my big areas, right? It’s tax for fellowship recipients. So, was that $5,000 just the IRS or was that split between California and federal?

24:08 Kelsey: Oh, yeah, it was California and federal, split.

24:10 Emily: Okay. That’s within the more reasonable realm. Okay. Yeah, definitely. I mean I’ve actually had, I think, two other people interviewed on the podcast who have also set up payment plans with the IRS based on this exact same situation. So, this is not at all uncommon, and it’s one of my big areas of focus is to get this information in front of new fellowship recipients. No longer is income tax–this is the case at almost all universities–no longer is income tax going to be automatically taken out of your paychecks. It’s something you now have to take responsibility for, like you were just saying.

Personal Finance for PhDs Tax Center

24:43 Emily: So, most likely you are going to be required to pay quarterly estimated tax. And I have a ton of materials about this. Again, if you go to pfforphds.com/tax there’s an article there. And in particular, I have actually a workshop for people in just this exact situation. If you go to pfforphds.com/qetax for quarterly estimated tax, it will forward you to my most recent workshop. And probably similar to yours, Kelsey, I have prerecorded videos for that, and I also do live Q&A calls to help people with questions as they come up through tax season. So, just because of when we’re recording this though, I want to add in that part of the response to the coronavirus crisis actually has been to delay the first, like the Q1 payment for 2020. So, just like with your annual tax return, right now, this year in 2020, it’s no longer April 15th, but rather it’s July 15th.

25:34 Emily: So, for those fellows out there, you have a little bit extra time to figure out what’s going on in 2020 regarding your quarterly estimated tax and making those payments. So, the first payment as of this recording is actually due [July] 15th, which is the quarter two payment. But yeah, totally a common story, like you were just saying, Kelsey, is just to not realize the change that had gone on with your income tax and catching up with it when you actually file your annual return and realizing, “Gosh, now I have all this money that I owe to the IRS.” So, how did that payment plan go for you? Like was the increase in stipend more manageable, or what were your tips around saving I guess?

Start Saving Immediately

26:11 Kelsey: Yeah, so I think I’m still paying off some of my taxes monthly for that. So, anyway, just do it ahead of time and you won’t have to worry about it. And then in terms of saving, the other thing is that, because the GRFP stipend is a lot higher than the normal grad student stipend, you can kind of get used to a certain style of living. Like you’re able to go out to eat more or buy more expensive groceries. And then as soon as the stipend stops, it can be kind of a shock. So, what I’d advise doing is actually just start saving almost immediately. And I use automatic monthly withdrawals to a mutual fund. And the benefit there is I don’t see the money. Like it’s just automatic.

27:02 Kelsey: The savings are out of sight, out of mind. And then when I actually really need it I can go and be like, “Okay, here’s how much I have.” And I’ve done that a few times. I used that to fund a vacation to Europe. And so I advise just like setting something up right away and make sure you can’t see the money. Save up for when the GRFP ends, and also just because you have all this extra money that you wouldn’t be getting otherwise, so you might as well save part of it and not just spend it all.

27:33 Emily: Yeah, I definitely echo what you’re saying. And I think especially where you’re living, it’s a high cost of living area. It’s probably already challenging to live just on that GRFP stipend and it’s certainly less than we’d be making if you were having a regular job. But, think about your peers who are somehow probably managing to survive, hopefully without debt, on that lower stipend level and see if you can maybe keep your fixed expenses, like your housing, your transportation, at that lower level, so that if your income does drop after the fellowship ends, you don’t have to move or you don’t have to sell your car. Or you can adjust the groceries and adjust the restaurant spending. And it’s much easier and more palatable than having to go through those more major upheavals. So, I totally agree with what you’re saying.

Stipend Negotiations and Bonuses for Fellowship Recipients

28:19 Emily: So, something I know that some fellowship recipients do–and it sounds like maybe you didn’t or maybe it wasn’t possible for you–is that once they know that they’re receiving the fellowship, they actually negotiate to have their stipend stay at that fellowship level. Even after it ends, instead of going back down to the baseline level. Or, alternatively, sometimes programs give out one-time bonuses to fellowship winners. Have you heard about that or have any experience in that area?

28:47 Kelsey: It’s something I thought about asking my PI, because after the fellowship ended, I was struggling a little bit, financially. I ended up doing the 25% TAship to recover that income. But I do think that, I mean it’s really going to depend on your PI and their sources of funding, but it is something that is possible, potentially.

29:15 Emily: Yeah. I think it’s kind of a “no harm in asking” situation. And actually, if you happen to receive this fellowship when you’re not yet committed to a program, so prior to starting your first year of graduate school, that is something I would take to every program that you’re heavily, heavily considering, saying, “Okay, I got this fellowship. Can you augment, can you extend the guarantee?” Like what more negotiation room is there now that you’re bringing in all this money for them, right?

29:46 Kelsey: I mean, exactly. You’re bringing in just about a hundred thousand in your stipend dollars alone, not to mention tuition and fees. So, it is pretty lucrative. It’s lucrative for a program and a lab to want to accept you because you’re coming in with all this money and you just asking like, “Oh hey, can I get an extra $5,000 a year?” When you’re bringing in $100,000, it’s really still a pretty good deal for them. So, I definitely encourage people to do it. I’d love to hear if anyone is successful at this.

Details on Kelsey’s NSF GRFP Course

30:17 Emily: Yeah, I always want to hear negotiation stories. Absolutely. Email or tweet me those. So, let’s hear more about your course and the content that you create there. You said the best place to find out more about that is your Twitter, could you repeat your handle?

30:34 Kelsey: Sure. It’s @ K L S Y W D (@klsywd). So, it’s my name without any vowels. It’s pronounced Kelsey Wood.

30:41 Emily: So, tell us a little bit more about the structure of the course. I know you’ve mentioned this a little bit upfront, but last year for example, you ran it between what month and what month and you know, what goes on in that time period?

30:53 Kelsey: Yeah, so one of my biggest pieces of advice for the GRFP is to start it early. So, it’s due in like October now. And if you’re on the quarter system, like UC Davis, classes start at the end of September. So, it’s basically due during the first month of classes and it’s also your first month of grad school. So, you’re either just starting in a lab or doing rotations, and that month is just crazy. So, if you don’t start the fellowship early, it’s going to be really hard to do it all and do it well. So, my course actually starts in August, so then you have kind of a full month to start to think about stuff, outline it.

31:35 Kelsey: And then you have September to really refine it before classes start. And then we do all the final drafting and editing in October. So yeah, my course is a three-month thing. And that’s one of the benefits of doing it online. I wasn’t able to start in August at UC Davis because not everyone had come to Davis yet because it was still summer. So, doing it online, I was able to get people just at least starting to think about it and getting ideas rolling. And so, what I do is I had four different webinars on different topics. So, I covered the two NSF criteria, which are intellectual merit and broader impacts. Basically like a full 45-minute webinar on both of those topics. And I think that’s really important because especially the broader impacts one is really confusing to a lot of people.

Focus on Broader Impacts, Know Your Audience

32:27 Kelsey: It’s something that you pretty much probably have never heard of until the NSF fellowship. And it’s a really important part of that fellowship, too. So, I really emphasize the importance of that. And also, it’s really important that you get broader impacts experience before you apply. And if you’re starting the application early or even people who are listening to this, thinking about applying for next year, should basically right now find some activity that you can do that you can write about in your broader impacts section. So, volunteering, outreach, teaching, et cetera. Because if you don’t have any experience, you’re not going to get it. And then I also do a webinar on writing tips. The biggest one that I’ve learned in all my years of writing is probably just like really knowing your audience and writing for them.

33:21 Kelsey: So, you really want to just imagine who’s reading it and who they want to fund, and you really want to just be that person that they want to fund. I help people do that in their essays. Something else that’s really interesting, and it actually might be a regional difference, is in the way that you want to sell yourself in these essays. So, a lot of people are really understated or humble, and I’m like, “No, you have got to really come off like a rock star and show off all the awesome things that you’ve done.” And apparently, somebody told me that that’s actually frowned upon in the UK or in Europe to do that in your grants.

34:10 Kelsey: But in the U.S., at least, it seems to be more popular or more of a winning technique. And so, the other part of the course is that I read people’s essays and give them a ton of tips and just help them write it and rewrite it to just have a better chance of getting the fellowship. And I also set up peer editing groups, too. And I do think that that’s something you want to do, if you take a class or not. Just find somebody who, especially who’s experienced with the NSF, and have them read your proposal and give you feedback. So, for example, when I applied, I was really lucky to have a former NSF reviewer read my application and give me feedback. And he pretty much destroyed my initial draft. It was red everywhere and he’s like, “Get to the point. Be more concise. This is too vague.” And so, I kind of have internalized his feedback and I use that now when I’m editing people’s essays.

35:13 Emily: Yeah, that sounds incredible. Thanks so much for telling us about the course. And were there any other tips you wanted to add in? I know you just gave several already, but any others?

35:23 Kelsey: I guess the last one would also just be to read a lot of example essays, too, for inspiration. And there are a lot out there. I have my own personal collection. I actually have quite a few in my personal collection that I share with people in the course. And then the ones that are okay to share publicly, I’ll probably be posting on my Twitter or on my website once I get that up.

Best Financial Advice for Early-Career PhDs

35:46 Emily: Yeah, that sounds great. Well, Kelsey, thank you so much for joining me for the interview today. And final question that I ask of all my guests is what is your best financial advice for another early-career PhD?

35:59 Kelsey: Well, I think the number one is to apply for fellowships and you know, cast a wide net and apply for anything that you’re eligible for, pretty much. I think it’s totally worth it. I have a quote that’s from that previous grad student who helped with the NSF workshop, which is, “You win 0% of the fellowships you don’t apply for.” So, I think it’s worth it. You can do it. And I guess the other thing is that I think it is important to consider the cost of living and the stipend amount when you are choosing a graduate school. I don’t know. This wasn’t really made apparent to me. And you know, you’re just like, “Oh no, you just choose the best school or the best lab.” But there is kind of a range in stipends across the U.S. and cost of living. So, I think it’s something to really consider because your finances are a part of your happiness in grad school. So, apply for fellowships, and consider that.

36:58 Emily: Totally, totally concur. Absolutely. Well, Kelsey, thank you so much for joining me today and telling us more about these decisions that come up for GRFP recipients and your own experience and about this fabulous course. Thank you.

37:10 Kelsey: Yeah. Thank you.

Outtro

37:12 Emily: Listeners, thank you for joining me for this episode. Pfforphds.com/podcast is the hub for the Personal Finance for PhDs podcast. There, you can find links to all the episode show notes and a form to volunteer to be interviewed. I’d love for you to check it out and get more involved. If you’ve been enjoying the podcast, please consider joining my mailing list for my behind-the-scenes commentary about each episode. Register at pfforphds.com/subscribe. See you in the next episode! And remember, you don’t have to have a PhD to succeed with personal finance, but it helps. The music is Stages of Awakening by Podington Bear from the free music archive and is shared under CC by NC. Podcast editing and show notes creation by Meryem Ok.

This PhD Student Buys Her Time Back by Living Car-Free

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In this episode, Emily interviews Alina Christenbury, a first-year PhD student in computer science at the University of Delaware. Alina doesn’t own a car, preferring to bicycle for her daily commute to her university and around town as much as possible. She relies on her roommate, sister, and other friends for occasional rides to the grocery store, bus stop, or hometown, but also uses ridesharing apps and dreams of owning a portable bicycle. While living car-free certainly helps keep Alina’s expenses down, the reasons for and benefits of her commitment to a cycling lifestyle go far beyond money. This is a great episode for anyone interested in living car-free.

Links Mentioned in this Episode

grad student car-free

Teaser

00:00 Alina: I think, financially, it’s generally a really good idea to have your priorities figured out. Like I’ve decided personally for me right now that cars are not important at all. And that lets me focus on things that are more important and dedicate my time and energy and resources to the ones that do matter.

Intro

00:25 Emily: Welcome to the Personal Finance for PhDs podcast, a higher education in personal finance. I’m your host, Dr. Emily Roberts. This is season five, episode 14, and today my guest is Alina Christenbury, a first-year PhD student in computer science at the University of Delaware. Alina is committed to cycling and does not own a car, which frees up a great amount of her income and time to be used for other purposes. We discuss how the location of your home and your city’s infrastructure can support or not support a cycling lifestyle as well as how Alina handles transporting groceries and traveling outside of her city. At the end of the episode, we touch on how Alina’s cycling lifestyle supports her values of frugality, time freedom, and sustainability. Without further ado, here’s my interview with Alina Christenbury.

Will You Please Introduce Yourself Further?

01:16 Emily: I am delighted to have joining me on the podcast today Alina Christenbury, and she is going to be talking to us about a commitment to cycling, which is a topic that I’ve been searching to find someone to talk about. So, I’m so glad that Alina and I found one another. On Twitter, in fact. I’m really excited about this. So, Alina, thank you so much for joining me on the podcast today. And will you please tell the audience a little bit about yourself?

01:37 Alina: Yeah! Thanks for having me and everything. So, I just finished up my undergrad degree at the University of Delaware in computer science, and I just started my PhD in spatial computing–well, technically computer science, but the study area is spacial computing–in June. So, that’s very recent.

02:00 Emily: Yeah, I should say we’re recording this in August, 2019.

02:04 Alina: Yes.

02:05 Emily: So, you have just, in the past few months, it sounds like, transitioned out of undergrad and into a PhD program.

Transitioning from Undergrad Into Grad School

02:09 Alina: Yeah. I wasn’t really planning on doing this, but then circumstances kind of arose where it seemed like it was a good idea for me. Particularly, they hired this professor who started a human-computer interaction lab at the university. So, that’s very related to my interests, and I kind of immediately latched onto her. She’s cool, and I’m working in her lab. I’ve been working in her lab for the past year now, since she was hired, essentially. So, yeah, it’s going pretty well, I think. For the lack of planning that it had, it’s turned out really well.

02:49 Emily: That’s really good to hear. It is a pretty easy way to get into a PhD is to just work with someone in an undergrad who you’re really clicking with and they just say, “Yeah, just come into my program, just come into my lab. I’ll accept you. I’ll make it happen. You don’t even need to apply, or you know, submit your GREs or whatever has to happen.” But yeah, it’s a great, stress-free way to go about it. So, you must like the University of Delaware to want to stay there longer, right?

03:14 Alina: It’s a good place. I started going here because it was in-state and because tuition costs are crazy and I’m not trying to incur a lifetime of debt. So, that’s kind of why I ended up going here initially. But I’ve kind of grown to really like the bikeability of the place, which is definitely really a contributing factor into how I’m going to examine life situations for the rest of my life. And I’ve gotten a lot of friends and kind of buried myself in a community here. So, yeah, I like it so far.

Personal History with Biking and Driving

03:53 Emily: Great. I’m so glad you brought up bikeability and the environment that you’re in right now because of course, that’s the topic that we have for today. So, tell us what is your personal history with biking and also car ownership? Have you always been a cyclist? Have you ever owned a car? That kind of thing.

04:12 Alina: So, in high school, I started driving. I used to live in southern Delaware, which is like an hour and a half south from where I am now. And you have to drive there because it’s just so spread out and very rural. And then when I moved to Newark, I pretty much immediately got a bike because it’s a lot closer and it’s actually viable for someone to bike here on a regular basis without too much hassle. So, I started in undergrad, like 2015 I want to say. And I’ve been biking pretty much daily ever since. Just commuting and going to classes, living life. I still do take infrequent car trips particularly for grocery shopping and visiting family downstate because they’re far away and I don’t want to take three days to go see my family, just getting there. So, yeah.

05:02 Emily: Yeah. We’ll get into kind of all those challenges in a moment. But first, I kind of wanted to ask you. So, okay, you’ve just transitioned out of undergrad. Are you living off-campus? Or were you living on campus for part of undergrad? Or what’s been the living situation versus where you work?

Commuting to/from Campus in Grad School

05:21 Alina: So, I live off-campus but very close. It’s maybe a six-minute bike ride from The Green, which is the central area for the University, pretty much. It’s maybe a 20-minute walk or so. Some people bike, some people drive. There are a lot of commuting options. I’ve pretty much always lived just off of campus within a 10-minute bike ride max, which has definitely helped a lot. So, yeah, the one time I stayed in dorms, even then it was on the northern part of campus, which is farther from the base hub of it. So, even when I was living on campus, it was kind of off-campus and still far enough away to make biking seem much more appealing than just walking everywhere.

06:12 Emily: That’s good to hear that you have been able to situate yourself so close to campus. And maybe you don’t know yet because you’ve been a graduate student for a short amount of time, but do a lot of graduate students live that close to campus or do some people live farther away?

06:28 Alina: The few whose houses I’ve been to are pretty close. There’s this one guy, Kent, who lives about the same distance as me, and I’m actually living with another grad student in another department in the same house and he’s as far away from campus as me. So, I’m not totally sure how common it is across the total grad student population, but I’m not the only person doing this.

06:53 Emily: Yeah. There are at least some opportunities to live that close to campus.

06:57 Alina: Yeah.

Bikeability of Newark, Delaware

06:57 Emily: So, tell me a little bit more about the city and how it’s set up to support cycling or not.

07:06 Alina: So, it’s very much a college town. The University really defines a lot of how Newark operates. So, during the summer it’s very, very quiet because all of the students are just gone. But beyond that, infrastructure-wise, there are a handful of bike lanes. Campus itself is very bikeable so you can pretty easily weave in between different university buildings and everything to get around, which is helpful. They’re actually redoing some of the main streets over the summer while a lot of the students are gone, which should make it even easier in the future. But yeah, so it’s set up pretty well to just be a person on a bike, which is not something you can say about every place.

07:48 Emily: Yeah. So, specifically, when you say it’s set up pretty well, can you describe exactly what you mean by that? Like, are there dedicated bike lanes? How do the drivers behave?

08:02 Alina: Dedicated bike lanes is the big one. Drivers aren’t too aggressive. I mean, it’s a small city, so there’s not hyper crazy traffic like somewhere in like New York. Yeah, I don’t think there are any protected bike lanes. There are some bike trails though that kind of snake in circles around. And then there are like some different park-ish areas that it goes through too. So, that definitely helps a lot too, I think.

Comparison to Dedicated Bike Lanes in Seattle, WA

08:33 Emily: Yeah. So, I’m at home in my apartment in Seattle right now, I’m looking out the windows onto a rather major street from my neighborhood that we live off of. And in the last couple of years that street has switched from having, I would say not actual–I guess there are bike lanes, right. But they’re not protected. So, on either side of the road, right. One going north, one going South. It switched to having a totally separate bike lane in parallel with the road that essentially takes up about as much room as a car lane. But there was, not physical barriers, but some space between the bike lane pair and the car lane pair. And my husband cycles to work along this road. And so, I think it’s really been helpful in giving me peace of mind knowing that he’s not so close to cars, you know?

09:18 Alina: Yeah.

09:18 Emily: But it sounds like there aren’t necessarily dedicated bike lanes like that, but there is designated space on either side of a lane of traffic for bikes.

09:25 Alina: Yeah, it’s more like where the shoulder would be is a bike lane and then maybe a shoulder beyond that. I do love how some cities are doing the dedicated bike lanes thing. And I wish we had more of that, but it’s hard to say how it’s going to shape out, I guess.

09:41 Emily: Yeah, there’s actually–not super close to where we live, but along the same road and bike path at a little bit of a more major intersection–the bike lane even has its own traffic light now, which I feel like is so European or something. Like, wow, the bike lane has its own traffic light and a time when they’re allowed to go and the cars aren’t allowed to go. In Seattle, there are a lot of people who commute not by single car. A lot of people cycle here. So yeah, the infrastructure is really being set up to support that. So, it’s really nice.

When Driving is a Necessity

10:11 Emily: Okay. So, we talked about Newark a bit. So, you brought up earlier that you do use cars infrequently for some certain special situations. So, when you do have a challenge, what are the kinds of things that you can’t or don’t at this point accomplish on your bike? And then what do you do to accomplish them?

#1 Grocery Shopping

10:30 Alina: So, the most frequent is probably grocery shopping, which I can kind of do, but I’m only within range of the more expensive grocery stores and the cheaper ones are a little farther away. Usually, I’ll go like grocery shopping with one of my roommates and we’ll just pick up a bunch of stuff for the week and then bring it home, everything. But sometimes for single one-off bits where I need food for just tonight, I’ll just bike to one of the stores and get like two things.

10:56 Emily: Is the main challenge more the distance or is it more transporting the groceries?

11:02 Alina: It’s more distance. For transportation, if it’s like only a couple items, I generally have a basket on the back of my bike that can handle small amounts. Not a whole truckload or anything of groceries, but enough for like two people for a week. And yeah, some of the other grocery stores are just, again, farther away and it’s like an hour-long bike ride to get there and then back would be another hour. It’s not necessarily as feasible.

11:35 Emily: You know, I saw a really funny thing the other day. I was just at Costco a couple of nights ago because I’m a Costco shopper. I actually saw someone in Costco in cycling type clothing and he had one of these little trailers that usually goes behind a bike that I see children sitting in but it was filled up with his Costco bulk food. It’s like, wow–and he also had his dog, like, you are dedicated to your craft, sir.

12:03 Alina: Part of me wants to try that one day. But I have not gotten around to it.

12:08 Emily: Yeah, I’ve never seen that before, but it happened just this week. Yeah. So, okay. So, you covered grocery shopping, but you also mentioned when you go visit your hometown because of your parents in that situation.

#2 Visiting Family

12:20 Alina: Yeah. So, my parents and six younger sisters all live in Millsboro, which is a little bit of a drive. So, maybe every couple months I’ll go down there for a weekend and hang out, you know, missing them and everything. So, it works pretty well. My sister coincidentally lives right across the street. So, she’s very close and we’ll generally drive down together for a couple of days.

12:50 Emily: So, if I’m hearing this correctly, your sister lives where you do and has a car?

12:56 Alina: Yes.

12:56 Emily: And so, you will both go back and visit at the same time. And that’s how you get there. Have you ever traveled without your sister?

Community Reliance When Car-Free 

13:04 Alina: Yeah. So, sometimes she’ll drop me off at the bus station and stuff, or I’ll just borrow her car. So, those are kind of some of the workarounds there. Sometimes I’ll take trips up to see friends in New York for a weekend or two and they’ll just drop me off at the bus station in Wilmington and I’ll just take a Greyhound, which I don’t know if I’d recommend. The Greyhound is okay. It’s very cheap but a time.

13:32 Emily: So, I had one year when I lived car-free when I was living just outside of DC. I was working at the NIH and I had a postbac there and I lived car-free. But, like you, I did some things borrowing other people’s cars or asking for rides from other people. So, the grocery situation, right? Going with a roommate. My now-husband, then-boyfriend, when he would drive his car to visit me there in Maryland, I’d be like, “Okay, well, you’re coming for the weekend. Awesome. We’re going to go to the grocery store as part of this trip. So I could mooch off you with the car situation.” So, I’m very familiar with this solution of, “Well, you end up relying on your community a little bit.” Which is not a bad thing. But I wonder, so in the 10 plus years since I did that one year living car-free, ridesharing has become a total thing. So, do you use Uber or Lyft or anything like that to any degree?

14:32 Alina: Not on a daily basis. I have occasionally used it to get to bus stations and airports and stuff. Just when the timing hasn’t worked out for other people. But generally, I try to go with friends and just make a whole thing out of it. So, yeah. I’ve mostly used it when navigating other cities when in conferences and stuff. But I kind of really want to get a folding bike so I can just take it with me and do that instead of relying on Uber and Lyft and those kinds of ride-sharing services.

Portability of Folding Bikes

15:06 Emily: Yeah, I saw a folding bike actually for sale a couple of days ago. I don’t know if I’d seen one in person before. It was very impressively small, but it looked kind of heavy. I don’t know. I didn’t try picking it up. How portable are they, really?

15:19 Alina: I mean it depends, right? There are ones that will fold to the size of maybe, I don’t know a good comparison for this, like a large dog, I guess? And then others that’ll be a lot smaller and just very light. There are a lot of variants within that whole arena. But I think if I can get one that is small enough that I could just carry it on a plane or a train or something, I think that’ll deal with a lot of those niche edge cases when traveling in other places. So, yeah.

15:53 Emily: Yeah, I would think that if you’re able to bike to a public transit hub and then take your bike with you, if it’s going to be a longer trip, that can definitely solve a lot of those issues.

Commercial

16:08 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.

Benefits to Living Car-Free

17:12 Emily: What benefits have you experienced by this commitment to living car-free?

17:17 Alina: So, it gets me outside, which is really nice. It’s one of those things where I am not naturally very motivated to exercise without a real reason. And transportation is a real reason that gets me consistently sort of working out, but just moving and doing something with my body. I only really recently started going to the gym regularly with some friends and that was mostly for social reasons and not necessarily for fitness. So, it kind of built-in this exercise regimen without me necessarily having to think about it and plan for it and everything, which is I think is really helpful. So, yeah.

17:58 Emily: Yeah. So, you get outside. You get your body moving. This is a personal finance show, let’s talk about the numbers. Let’s start with how much money you are spending. So, where did you get this bike from? And how much does the maintenance cost?

18:14 Alina: So, the bike I got at a local bike shop. I think it was around $500, and then another maybe $200 and little add-ons like the rack and some bike bags and stuff. And then maybe once or twice a year, I’ll take it back over there for maintenance. But initially, when I got it, I got a maintenance plan. So, even when I do get it maintained, the labor’s free and I only have to pay for parts. So, I maybe get my brake pads replaced once every year or two years, or so. And then stuff like with tires blowing out or whatever is also pretty infrequent. So, it’s really not a lot. I’d say like a hundred in maintenance a year. And I’m not paying for insurance. I’m not paying for gas. I’m not paying for the “car” bike itself. So, yeah. I haven’t really looked into buying a car, so I don’t totally know what the numbers would look like if I were doing that instead. But I think the financial savings are pretty substantial just based on the frequency of use alone.

19:19 Emily: Yeah. I mean, I can tell you as a car owner, cars are a lot more expensive. Even a very, very cheap car–several times as expensive as a bike as well. And really, the gas costs, the insurance, as you mentioned.

19:33 Alina: It all adds up over time.

19:35 Emily: Yeah. And the maintenance, too, on a car is like–if you haven’t planned for it, if you haven’t saved for it, budgeted for it–it can be a real shock. I mean $500, a thousand dollars, multi-thousand dollars easily for maintenance. And you’re just not going to get to that scale with a new bike. You’re just going to buy a new bike if things got to that degree of a problem. Yeah. So, I’m sure it helps with the budgeting and everything. So, yeah. Have there been any downsides to this commitment? Aside from the slight challenges that we’ve already discussed. Like I don’t know, maybe weather? Anything like that?

Downsides to Biking Commitment: Weather and Community Reliance

20:10 Alina: I was going to say, the weather is probably the biggest one. I definitely have to limit how I dress in certain ways during certain seasons in order to accommodate this. It’s pretty hard for me to wear longer dresses and skirts and stuff because it can just get caught up with the gears and everything. And then I definitely have to layer well, particularly in cold and rainy weather. Otherwise, my entire body just gets soaked, which is not great. I don’t recommend it. But yeah, that’s probably the biggest one, honestly. And then again, the community reliance is a little bit annoying sometimes. But we have backups for that, like Uber and Lyft, so it’s not as much of a hurdle as it would be otherwise. Yeah, those are the two biggest downsides, I think.

21:05 Emily: Yeah, it definitely sounds like a worthwhile tradeoff given the amount of money that you are not spending. And I can just say, again, my husband cycles to work. We live in Seattle. It rains–not heavily, but quite frequently–here. And so, he’s biking in the rain a lot and like you said, he had to buy some special clothing that’s water-resistant, waterproof. But after that, he’s pretty okay. Like, it’s alright, he just takes off that layer when he gets to work and puts it back on when he leaves again.

Peer Perceptions About Not Owning a Car

21:34 Emily: So, what do your peers think about you not having a car? Is this an unusual thing?

21:44 Alina: I don’t think it’s totally unusual for this age range and location. I’ve definitely convinced some of them to try this more because I really like this, I just talk about it a lot. So, I’ve kind of seen a handful of my friends pick up their own bikes over time, which is always like, “You’re doing it! Good job, I’m proud of you.” So, I mean, they’re generally supportive, I think. So, yeah.

22:13 Emily: It’s clear from your enthusiasm in this conversation that you are a biking evangelist, right? You want to spread the good word about biking.

22:23 Alina: Yeah! It’s so much cheaper! There are so many benefits!

Additional Bike Benefit: Sustainability

22:28 Emily: Well, another benefit that you haven’t brought up yet is sustainability and energy usage. So, can you talk a little bit about that?

22:34 Alina: Yeah. So, the only thing it really costs is human energy. And even that is beneficial because it’s cheaper than a gym membership, for one, but it doesn’t pollute the air, which is a perk. And it’s very location-dependent, but if you can get past that, it doesn’t damage anything.

23:09 Emily: Yeah. I have observed that there are many, many overlaps between frugality and living a more sustainable or a smaller carbon footprint kind of life. This is one of the big areas, right? If you drive less, if you can drive less to the degree that you don’t even need to own a car, then you’re really shrinking your carbon footprint as well as not having those line items in your budget that are pretty big ones.

23:38 Emily: I mean after housing, transportation, and food are like the next two big expenses for Americans. And so, if you can pretty much eliminate one of those three big ones by using a bike instead–as we said, it’s a very small outlay of cash to buy the bike and the maintenance is very, very low–it has an incredible impact on your finances, but you can also feel good about the impact on the Earth, right?

24:05 Alina: It doesn’t use as many resources as a car, that’s just fact.

24:08 Emily: Right. And many, many of us Americans, we have calories to expend, I’ll put it that way. There’s plenty that we’re already eating that if we decided to burn it off through biking, that’s a great use. As you said, instead of maybe going to the gym. Like maybe just building this exercise into your general lifestyle and then not having to seek it out on extra time and extra kind of dedicated way that again, costs more money as you were just saying. I understand that you are, well, I don’t know what you’d like to call yourself. Some people say FIRE walkers, right? What’s the term that you like? You are pursuing FIRE, which is financial independence and early retirement, and I understand that this cycling lifestyle plays into that. Can you talk a little bit about that?

FIRE: Financial Independence and Early Retirement

24:56 Alina: I mean, I don’t really like titles. I’m just a person trying to live in what I think is the best way that I know of so far. But the FIRE movement is really inspiring and I think really had an influence on how I look at priorities in life and what really, really matters. And cars, I’ve decided really don’t matter for me and I’m willing to work around that in other ways to work on other things. I think freeing up most of my time is really important just so I can work on things that aren’t necessarily going to be paid. So, I wouldn’t necessarily say volunteering, but community organizing is really important to me. Game design is really important, and there are all kinds of other things that are more deserving of my attention than cars. So, this helps free up the most time for that, I think.

25:57 Emily: Mhm. So, you’re really thinking about and being inspired by the FIRE movement, not only in having more control and autonomy over your finances but also over your time?

26:06 Alina: Yeah, I mean I view it as buying my time back, really. This is a really big motivation for looking into it and kind of following a lot of the tenets, I guess. So, it’s one of those things where I don’t think the ultimate purpose of humanity is to work and accumulate capital, right? There’s so much else to do, but you have to have the time and autonomy to do that. And if you don’t have that, then you turn it into this negative cycle of just always working for someone else and never really fulfilling what you really want to do with your time.

More Details About the FIRE Movement

26:43 Emily: Mhm. Yeah, so we haven’t really defined this that well in this episode, but if people want to hear more about FIRE, financial independence and early retirement, I did a two-part interview with someone else pursuing FIRE, Dr. Gov Worker, that was published in season three of the podcast. So, you can go check that out. But basically what we’re talking about is lowering your expenses, raising your income, saving a whole lot of money so that you can, as you were just saying, buy back your time. Maybe you want to leave your job, eventually. That would be more like what we call retirement. Maybe you want to do that particularly early, early retirement, or maybe you just want to have the ability to be able to have more control over what your job is. Like have more negotiation ability around what your job is because you have the ability to walk away.

27:29 Alina: Being able to say, “No,” matters so much because if you feel like you can’t say, “No,” to bad opportunities and bad decisions, then you don’t really have a lot of power over your life. And then it just gets really depressing, which is where policies like universal basic income can be really empowering to kind of fix that issue for the general person across everywhere instead of specific niches that are trying to do it themselves.

28:03 Emily: Yeah. This is so interesting. I would love to talk about this topic further, but we said we were going to keep this episode about cycling, so that’s I think we’re we’ll leave it. So, there’s definitely a lot to follow up on if other people are interested in being inspired by the FIRE movement, as you were. Can you give a couple of recommendations for where you learned about this or maybe people to follow in the movement that you like?

Personal Finance Subreddit and Mr. Money Mustache

28:27 Alina: So, the only real interaction I had was the personal finance subreddit. They have a very extensive FAQ and Wiki, and it goes into a lot of different detail about different strategies for managing your finances and potentially reaching early retirement. Mr. Money Mustache is also the really big figure people probably should already know about him by now. He’s been around. And then I actually took a personal finance class in high school because I was like, “I need to be prepared for this. It’s an inevitability of adult life.” So, those are the majority of my influences here.

29:06 Emily: Yeah, that’s great to know. I also really enjoy the personal finance subreddit. Mr. Money Mustache–you have to have a certain taste for his material. I’ll say that. You either love him or not so much, but he’s a great person to have at least a little bit of exposure to, as you said, because he’s such an influential figure in the FIRE movement broadly. The thing is, his definition of frugality, definition of what living a rich life is on a low amount of money is very compatible and consistent with the graduate student experience. So, if you are looking for ways that you can be inspired to spend less money–maybe because you don’t have money to spend–Mr. Money Mustache is a great person to look to and he is, not surprisingly, a huge cycling advocate as you are. Yeah. So, if you’ve been intrigued by what Alina’s had to say, as a next step, go to Mr. Money Mustache’s blog and read more about cycling because he will definitely motivate you.

30:09 Alina: Oh my gosh. Yeah, he’s crazier about it than me.

Best Finance Advice for an Early-Career PhD

30:12 Emily: Yes, he’s very committed. So, last question here as we wrap up. What is your best financial advice for another early-career PhD?

30:21 Alina: So, I think, financially, it’s generally a really good idea to have your priorities figured out. I’ve decided personally for me right now that cars are not important at all. And that lets me focus on things that are more important and dedicate my time and energy and resources to the ones that do matter. And if you don’t necessarily have that straightened out, it can be kind of difficult to budget and figure out what you really want. And finance is just another element of that.

30:53 Emily: Yeah, I totally, totally agree. I mean getting your priorities straight, figuring out what’s most important to you is super foundational and helpful in personal finance, but it’s really something that you need to know in every area of your life. Especially as a graduate student or a postdoc and early-career PhD, you’re making a lot of decisions around your career. And so, I think, unfortunately, sometimes because of the bleak job prospects at the faculty level, we can get a little like, not very confident or down on ourselves about our employment prospects and can kind of be like, “Oh, just take whatever comes my way. Anyone who wants to get me a job, like I’m going to take that job.” And having thought through a little bit more, what are your priorities when it comes to your career? What are your priorities when it comes to your personal life? How can your career support your personal life? That can help you be a little more selective around the job choice and as you were saying, be able to walk away or design the job that you want to, if you also have your personal finances in order. That gives more power on your side of the table rather than your employer side of the table. So, Alina, it’s been a real pleasure chatting with you about this and I’m so excited for you starting your grad student journey. And yeah, thanks for coming on the podcast.

32:05 Alina: Yeah. You can find me on the internet at alinac.me and @AlinaWithAFace on Twitter.

32:11 Emily: All right. Thank you so much.

Outtro

32:14 Emily: Listeners, thank you for joining me for this episode. Pfforphds.com/podcast is the hub for the Personal Finance for PhDs podcast. There, you can find links to all the episode show notes and a form to volunteer to be interviewed. I’d love for you to check it out and get more involved. If you’ve been enjoying the podcast, 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.

How This Graduate Student Rejects the Academic Culture of Being Broke

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In this episode, Emily interviews Hajer Nakua, a rising second-year PhD student in neuroscience at the University of Toronto. Hajer describes how the culture of being “broke” in academia becomes a self-fulfilling prophecy for individual graduate students. Hajer and Emily discuss in detail Hajer’s top three strategies for breaking this cycle of brokeness in graduate school and how you can change your money mindset. Hajer identifies the culture of consumerism as the top culprit.

Links Mentioned in the Episode

academia culture of broke

Teaser

00:00 Hajer: You know, if people don’t talk about how they’re spending money and all they talk about is the fact that they’re broke, it’s really easy to be like, “Okay, yeah, sure.” But to be more open with money and not have it very taboo I think will really help spearhead discussions of what does it mean to be in graduate school and have money. Like, how are the best ways to spend my stipend?

Intro

00:25 Emily: Welcome to the Personal Finance for PhDs podcast, a higher education in personal finance. I’m your host, Dr. Emily Roberts. This is season five, episode four, and today my guest is Hajer Nakua, a rising second-year PhD student in neuroscience at the University of Toronto. Hajer describes how the culture of being broke in academia becomes a self-fulfilling prophecy for individual graduate students. We discuss in detail her top three strategies for breaking this cycle of brokeness in graduate school, and how you can change your money mindset. Without further ado, here’s my interview with Hajer Nakua.

Will You Please Introduce Yourself Further?

01:04 Emily: I have joining me on the podcast today, Hajer Nakua, and she is a recently started graduate student. We are recording this in August of 2019 so she’s going into her second year. And we’re going to be discussing today the “culture of broke” inside academia and how to combat that with your own personal finances. So, Hajer, thank you so much for joining me today. And will you please tell the audience a little bit more about yourself?

01:28 Hajer: Thank you very much, Emily, for having me. And sure. I just finished my undergrad in Psychology, Neuroscience & Behavior at McMaster University in Ontario. I finished in April 2018, and in September 2018, I started my graduate training at the University of Toronto. It’s technically in the Institute of Medical Science, but my field is specifically neuroscience. And even more specific, I use computational technology. So, things like neuroimaging, brain imaging, MRI, to better understand brain behavior relationships in a population of psychiatric children.

The Culture of “Broke” in Academia

02:07 Emily: Very, very interesting. So, you have been in academia–well, your PhD program, at any rate–for only about a year, but that’s been long enough to start to absorb the culture of being broke. So, would you please start to describe that for me?

02:22 Hajer: Sure. I’ve actually noticed this culture very, very persistently in undergrad, and it’s more of a student thing than when you’re a PhD–you’re still considered a student. And it’s just the idea that students, because they don’t have a very stable income, they’re supposed to be broke. And that is a very, very persistent limiting belief that many students have. And I find that particularly in PhD, Masters, or any graduate school program because of the high expense of the program, people just sort of settle into the idea of, “Oh, I’m broke, I’m supposed to be broke.” And it often limits them from taking the necessary measures to try to build wealth even during their PhD or graduate school training.

03:00 Emily: Well, you know you have found a very friendly audience in me with this message. I totally agree with you. To me, like if you’re looking at the numbers, right? Like if you’re actually looking people’s income and outflow and everything, to me, there’s usually a pretty big difference between someone who is paying out of pocket to be in school. They’re probably taking on student loan debt or maybe they’re supported by their families or even maybe they’re drawing on their own savings from the past, and someone who does have their education expenses paid for, plus there’s a stipend on top of that. That to me is like black and white, a very different situation. But you’re right that, because there’s often a continuum between those two things, people who are on the, “Well, you actually do have an income side of that,” can have some of the mindset still from when they were on the other side of the equation. Again, because as you said, the label of “student” is still there. And you said for me a couple of magic words, which were “limiting beliefs,” which I am very interested in. Can you expand on that a little bit?

Can You Expand on Limiting Beliefs?

04:03 Hajer: Sure. So, in general, a limiting belief is this very persistent idea someone has that often allows them to settle into something that prevents them from moving forward with whatever it is that they want in their life. And that’s a very vague and general explanation. But in this case, I find that when people say things such as, “Oh, I’m broke,” they sort of get over the idea that, “Maybe I should have a savings account, maybe I should start, you know, being more financially savvy.” They’re like, “Should I buy this $10 meal? Yeah. Whatever. I’m broke. What another $10?” So, it’s this constant idea that any sort of wealth, any money management is not applicable to their life.”

04:46 Emily: Yeah.

04:46 Hajer: I think that’s very persistent in particularly graduate school. And quickly commenting on one thing that you said. Although there is a stipend, and it’s fair that many people move for a PhD program, so that often goes towards living expenses. So, of course, the amount of money that someone gets, it’s not high, but it’s still, as you said, a little bit surprising to me sometimes that there’s such a strong sense of, “I have no money,” even though technically there is some sort of cash flow coming in.

05:16 Emily: Yeah. And this is another difficult point, right? Because for some people, the stipend is insufficient to live on in that city. It’s tragic that some graduate schools choose to pay their students that way–their workers or their fellowship recipients–that’s something that needs to change kind of about the higher education system as a whole. So, in some cases, it really is true. There’s not enough to live on. You have to be going into debt, whether it’s student loan debt or consumer debt or you’re being supported by someone else. And I think around 50%, or if I’m trying to remember the stats correctly, around 50% or less of doctoral students ultimately do take out some sort of student loans during their graduate degrees, right? Not just from undergrad. Yet, in other cases, as you were just saying, the stipend may be sufficient to live on maybe even sufficient to do a little bit more with.

06:09 Emily: But because of those limiting beliefs, that isn’t even considered, it’s just an assumption. You’re a student, you’re going to be broke, there’s nothing else you can do about it. And like you said, sort of acquiescing to that idea and not acting in a way that could change that situation just because you think that it can’t be changed. Yeah, this is a big part of my message, so I’m really glad that we can have this discussion today. So, what would you say that if someone does accept being broke as a limiting belief, even if it’s not factually numbers-wise necessarily the case–what’s the harm in that? What’s the effect in that?

The Harm of Brokeness as a Limiting Belief

06:48 Hajer: It prevents them from trying to seek opportunities to sort of build any sort of wealth or income. When I say wealth, I don’t mean, you know, those like $1 million wealth. I mean, just sort of being able to work towards your financial freedom, which is a huge goal, particularly in the West as a lot of prices have been getting a lot more expensive. So, it prevents starting that. People often say, “Oh, in my PhD I’m broke so I’m going to stay that way. And then maybe after I’ll sort of think about how I want to think about money or how I want to build my income.” I find that very problematic because PhD is a really pivotal time in your life. So, the vast majority of people start between 22 to 32, in that decade, a lot of students are. And that’s a really key time to sort of build for retirement, or whatever it is, any goals that you may have.

07:40 Hajer: So, starting from an early age, they think, “Oh, that’s it. That’s a problem for later.” Or, “No, I don’t have the money to try to really focus on building financial freedom slowly, slowly, slowly.” It can really be detrimental in their ability to A) save, and also learn how to be good with money when you don’t have a lot of money. Because we’re not saying that PhD students have a great salary, as we’ve spoken about before, but it’s still important to sort of think about ways to be financially savvy at a time where you may not have a lot of wealth. And then as you build on later in life, you’ll get better and better at it. So, I feel like there’s a lot of wasted opportunity during the PhD years once someone succumbs to that limiting belief.

Investing in Yourself: A Cautionary Tale to Grad Students

08:25 Emily: Yeah, I totally agree. There are two points in there that I’d like to follow up with. The first is, so at least I have heard, you know, from some aspects of the culture, that your twenties are your time to invest in yourself. Don’t really worry so much about saving for retirement or whatever it might be. There’s time to do that later. Your twenties are your time to invest in yourself. And, if you’ve heard that message, you might think, “Well, yeah, I’m pursuing a PhD. Like that’s a great thing to be doing with my twenties in terms of investing in yourself.” And that’s true. But I do think that maybe the people who are propagating that, “Twenties are the time to invest in yourself” message are assuming that people have a much higher income. That during the course of your 20s, you’re going to be ramping up that income and you know, pursuing all these different opportunities.

09:12 Emily: Maybe you’re starting your own company or whatever it is. That’s a little bit of a different level of potential wealth, you might say, then what we’re talking about in more like the PhD land. Because it is a really difficult thing to start off, let’s say in your twenties, with a certain stipend. And then five, six, seven plus years later still have pretty much that same stipend that’s coming in. It’s very difficult to increase your income at all while you’re in graduate school unless you turn to outside sources of work. So, that’s something that doesn’t really jive for me about that message of like, “Invest in yourself in your 20s.” It’s like, yeah, you can do that, but please note that your income, if you do that through graduate school, is not actually going to be increasing during that time. Or at least not, you know, appreciably.

Investing in Retirement: Slow and Steady Pays Off

09:57 Emily: So, that was one thing that I wanted to point out. And the other one was just, as you were saying, I just wanted to underline the power of starting to invest. Whether that’s, you know, paying off debt or actually investing in stocks or something in your 20s is incredibly valuable because you have so much more time on your side before you reach the goal of, “Okay, I want to support myself in retirement,” or whatever your goal might be. It’s so, so valuable to put away even a very small amount of money early on. The earlier on you can do it, the better because of the magic and the power of compound interest. So, it’s something where like, as you were just saying, if you acquiesce to the idea that you’re going to be broke and you can’t, you know, invest for retirement or pay off your debt or whatever–if you succumb to that idea in your 20s, you might dismiss, “Oh, well, okay, I did have like $20 this month that I could have saved, or like $50. That’s not that much money, whatever. It’s fine.” Actually that is a lot of money once you compound it over multiple decades. So, it’s something where, as you were saying, succumbing to that limiting belief really does damage you in the long-term. If there was something you could have done about it, you know, in the present, which again, for some people it isn’t, but for others perhaps you could.

Investing in Yourself vs. Your Future ≠ Mutually Exclusive

11:16 Hajer: Yeah. And also I wanted to comment on the idea that, “Oh, in your 20s you’re supposed to enjoy yourself and invest in yourself.” And while I agree with that philosophical idea, I think that people often make it very mutually exclusive where there is being financially savvy and then there’s enjoying spending on yourself and investing in yourself and quote unquote self-care and all that kind of stuff. So, I think the message which is driven by consumerism teaches people that, “Oh, you don’t need to think about the future now. You don’t need to be financially savvy now. It’s just spend whatever you want to spend.” And if you have that limiting belief that you’re broke, it’s a very easy message to take in. And it also sort of fills that cognitive dissonance that anyone may have. However, again, I don’t think it’s mutually exclusive.

12:02 Hajer: I think that you can equally–if you’re able to support yourself and your stipend is sufficient–I do genuinely think that you can enjoy yourself and invest in yourself, whether it is with consumerism goods or other self-care habits, and also plan for the future and try to be more financially savvy. And it doesn’t need to be as complicated as investing, but like you said, it could just be having an emergency account that you know that every month a hundred dollars is going to be put in the savings account. I definitely think that in many cases, you can do both. And I think life is very enjoyable when you do both because you know that you’re enjoying the present, but you also know that you are planning for the future, and I think that there’s a lot of sort of warmth that comes with that on the inside.

12:45 Emily: Yeah, I totally agree with what you’re saying. This is what I found to be the case as well, that I never wanted to completely sacrifice my enjoyment of the present. A part of me enjoying the present was feeling more secure in my finances. And so it wasn’t like it has to be all one way or the other. And again, this is another limiting belief, right? Like, “You can only work on your financial future and then the present is going to be completely sacrificed.” Or, “You can only enjoy the present and then you cannot do anything for the future.” In fact, there usually is a balance between those two things. And why also when we choose to be extreme in one way, do we always choose the extreme of enjoying the present and not the extreme of sacrifice in the present, at least for the vast majority of people? So, yeah, I really enjoyed that part of our discussion. So, okay, let’s say we have a listener who says, “Okay, I’m hearing you. I’m hearing you. What can I do now on my grad student stipend or my postdoc salary?” Or whatever amount of money is coming in. You know, “How can I not be broke anymore? I’ve been telling myself that I have to be broke. Okay. Maybe I don’t have to, but what do I actually do to not be broke anymore?”

How to Exit the Cycle of Broke

13:51 Hajer: Okay. I love this question. I wanted to say more of a philosophical idea and then go towards practical tips. The first thing is to recognize that you’re always accountable for all the money that you use and you spend, because I think that people often–I hear this all the time, “I don’t know where the money goes. It just sort of leaves my bank account, and I just keep tapping. I have no idea what I’m buying.” So, I think when you’re at that level, you really need to step back and think, “Where is my money going?” If you’re a Tapper, if you’re just like, “I can tap my way through life,” you really need to sit back and think, “Well, what am I actually tapping on? How do I stop these habits?”

14:29 Hajer: So, I think that’s the first important step to acknowledge self-accountability in your spending and financial habits and your financial future. That’s number one. Number two, I think saving money can be a lot easier than people expect. And oftentimes when you go to YouTube or you read these blogs, they have these very complex budgets and you know, all these things are very meticulous and they understand that as a graduate student, a lot of our time is spent on project management, making sure that we’re sort of completing every stage of the project. So, you don’t want to add so much more to your plate that you’re being super meticulous. So some habits that I started off with is A) have an automatic transfer from a checking account to a savings account. So, I will check how much money would I need to save per month for whatever it is that I want. Maybe I’m saving up for a vacation, saving up for a car, whatever it is that you want to do. Calculate your monthly budget and then just transfer that so it’s on autopilot. You never have to think about it. And whatever’s left in your checking account, you can just spend. And that way it’s a much simpler methodology to get the end goal. Which is that, there’s a certain amount allotted for things that you want to do. You’re thinking about the future, but you have enough to enjoy.

You Don’t Have to Budget in Order to Save

15:43 Emily: I want to add to that for a moment because I think this is a really, really good and important point. Because there are some people who as you said, maybe it’s because of busy-ness, but maybe it’s not–some people don’t want to keep a budget. They don’t like to be feeling–even though they’re telling themselves what to do–they don’t like being told what to do with their money at any given time. So, the thing is though is that you don’t have to budget to save, but you can just go ahead as you were just saying and take the step of saving. And as long as you don’t end up overdrawing the amount of money you have left, then Hey, you’ve accomplished the step of saving and you’re trusting yourself to stay within the ultimate confines of the remainder of your money.

16:25 Emily: And you don’t have to silo all that money off into different categories if you don’t want to. If that’s helpful for you, great. But if you’re too busy, you don’t like it, just start saving and you know, adjust–you can live off the rest of it. So that tip, I mean, if that’s the only one anyone gets out of the podcast, that’s a hugely powerful one. I totally agree with you. Automate savings, do it first thing after you get paid. Don’t allow yourself to consider that money part of your general monthly spending, but rather put it first thing towards whatever goal it is that you’re working on, as you said. So, please continue. But I love that first point.

Tip 1: Automated Savings. Tip 2: Check Your Food Expenses

16:57 Hajer: I’m happy that you like it. What really helps me, especially during grad school–because I’m someone who is more on the meticulous end. I like know exactly where everything’s going in all aspects of my life. But I really found that this tip is the best one to start off with because I’m a big believer in gradual changes. So, nobody’s going to go from a reckless spender to a meticulous budgeter in a month because they have this very intense goal. And I think that it’s not practical to think that or to take those steps. So, I think sort of automated savings is the best way to go especially for graduate students. And then further on, as your money increases, you may want to be a little bit more meticulous. My second tip, and I’ve seen this in undergrad and graduate school, people spend an absurd amount of money on food, I’ve learned.

17:43 Hajer: And not grocery shopping. We’re not talking about whole foods, organic apples, we’re just talking about buying food every single day, buying a coffee and a drink with that. So, a lot of people that I know in graduate school spend $20 a day just on their daily food intake, in addition to any grocery shopping that they may do. And I really wanted to bring this up because when you really calculate how much money food takes out of your wallet, it almost would make you cry because it’s just one of those things that you don’t feel it because it’s $15 here, it doesn’t seem like a lot. The next day, $7 here, it doesn’t feel like a lot. So, that’s one thing. If you find that a lot of your money is being spent on to-go food, so food outside of your own home and outside of groceries, I really think the first step in addition to the savings account is tightening that up and trying to just do the grocery shopping and meal-prepping or whatever it is that’s how you want to eat. It’s up to you. So, we’re not talking about from a health perspective, although it helps. But from a money perspective, I really think that’s the first place people need to look at–their food spending habits.

Pay Attention to Repeated Spending Patterns

18:48 Emily: Yeah, of course. I have more to say on this as well because I love this tip as well. So, I actually found myself falling into this when I was in graduate school. So, something that would happen to me–and you can tell me if you relate to this–this is especially in the first couple of years when I was in grad school and I was still in classes and had like homework to do and stuff. So, you know, go to campus, you know, do your classes. I’ve packed my lunch. Okay. I packed my lunch every day, but there were plenty of days when I would sort of, without knowing in advance, I would actually stay late. So, I would stay over the dinner hour and be working on campus in the evenings because, you know, I had like a good study group going for like a couple of my classes.

19:23 Emily: We would meet and kind of talk about the homework and stuff, you know, in the evenings, a couple days a week. Maybe there’s something in the lab that I didn’t get to during the day. I need to get to it a little bit later. But I didn’t want to be hungry, of course. So anyway, I would go and buy convenience food on campus. This would happen, you know, once, twice a week, something like that. Not seemingly a hugely damaging habit. But when I kind of stepped back and evaluated that, I was like, “Okay, this is a pattern. It’s not totally unexpected that I stay into the evenings at least a couple days, you know, on campus.” So it’s not like, “Oh my gosh, this is only happening this one time. It’s a one-time exception.” No, it was an exception that was happening on a regular basis.

20:05 Emily: And so once I realized that that pattern had formed, I was like, “Okay, I need to do more than just pack my lunch. I have to also keep some food that I could eat for dinner at least as a heavy snack or something that’ll tide me over until I actually get home in the little bit later part of the evening.” So, it’s one thing, of course–people have heard the tip, right? To pack your lunch–but I would say just if you see patterns developing where you need to eat on campus and you see yourself turning to convenience foods, just try to acknowledge that that’s happening and take some steps so that it doesn’t catch you by surprise.

Keep a Snack Drawer, and Bring Your Own Tea (or Coffee)

20:38 Hajer: I actually had the exact same experience. I started to develop like a snack drawer. So, there’s a couple of healthy snacks I like, some that I make, some, you know, whatever it may be–maybe it’s like an apple or something for the week–and I keep that there. And that way, whenever I have to stay later–which I try not to do, I am someone who, you know, at 4:00 PM that’s my home time–but of course, like you said, there are times you just can’t control it. So, I know that there is something there and it’s something that I brought. Even if it’s a $3-4 bagel, that still adds up. My biggest thing was I used to really enjoy buying tea outside. I just loved in the morning coming with my tea and it was only $2 and 67 cents from Starbucks at the time.

21:24 Hajer: I memorized it and I always had it ready because I knew exactly how much it was. But over time you realize how much it would cost. And what I started to do is A) bring my own tea and buy a really cute mug. So, I felt good walking in with my tea mug. But sometimes if I didn’t have my mug, I would actually just ask for a cup and hot water and I would bring my tea bag, and I have them on my desk. And that saved a lot of money. But you just don’t feel that because $2.67 doesn’t seem like that much money. So, even something as small as tea, I felt that like, “Oh wow. By the end of the month, I have considerably more money than I did last month.” And it was just one very small change.

21:59 Emily: Yeah, because it’s a daily or an almost daily habit. Making a small change can make a huge difference.

Commercial

22:09 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.

Changing Your Money Mindset

23:12 Hajer: One thing that has really helped me is–so, there’s multiple aspects of consumerism that we all fall into, and I think it’s very pertinent in grad school just because, “Oh yeah, the whole broke culture.” But it’s a very funny dissonance where we love to talk about how broke we are, but we love to spend money at the same time. So, I find that’s very common. So, in general, in addition to food, other habits that you may have, I think it’s very important to check. So, many of us like to spend a lot of money on fast fashion. And we know that it’s not going to last very long. We just love the idea of going into a fast-fashion store, buying a $40 shirt. Seems like a good idea, but you know, in four months you’re not going to wear that shirt anymore.

23:54 Hajer: So, it’s things like that where you really want to try to look at alternatives where you may have to put in a greater sum in the beginning, but in the long run you’re really going to help your finances. And I think thinking in that way has really helped. So, instead of the idea of instant gratification, “I want a latte right now. I want this shirt right now. I want this meal right now.” Get outside that mindset. And instead think, “Okay, long-term, what do I want? Because when it comes to the food or the clothes or whatever, the idea is, “I want to have a meal that I enjoy.” That’s really the core of what you want. But that can come in many different ways. And many of it you can save a lot of money with.

24:34 Hajer: “I want to buy clothes that I enjoy.” Okay, well, what are better spending habits that you may do so that in the long-term, you know that you’re saving money? So, and just in general, letting go of the need of instant gratification, which to be honest, is very, very hard in our very, very multi-consumerism culture. Many businesses make billions of dollars because of the fact that it’s very hard to let go of instant gratification. But the way that I like to think about it is, the PhD is the biggest test of lack of instant gratification in your entire life. You are never going to get this level of delayed gratification where you work two years and you got one paper. You know, you work four or five years, you finally got your PhD. So, really changing your mindset and saying, you know, “I’m doing this for the long run. Like I know that the PhD is not going to be enjoyable all the time, but at the end I’m going to enjoy it.” Think that same way about money and your finances. And I think that one thing is just so powerful, and it can fuel a lot of change. So, although it’s not as much a practical tip, but I think that’s an important way to redirect or reconceptualize how you view your spending habits.

The Multiple Benefits of Being Future-Focused

25:47 Emily: Yes. Unsurprisingly, I love this point as well. This is actually something that I’ve spoken and written about on a few occasions, but I’ve never heard anybody else bring it up. So, I’m really glad that you did, which is the specific characteristics of a person who is in a PhD program or has completed a PhD program. Some of those characteristics can lend themselves very, very well to financial success. As you were just saying, thinking long-term about your career. “Okay, I’m going to dedicate multiple years to achieving this PhD.” As you were just saying, sometimes the experiments, the research itself, can take a really, really long time, especially at the beginning. You become really persistent. You are dedicated when you are in a PhD program or have accomplished a PhD, and you’re really future-focused.

26:33 Emily: And all those things serve really, really well if you’re able to translate them into the area of your personal finances as well. PhDs are also resourceful. They are creative. They’re all these really positive things. Even just getting admitted into a graduate program means that you have a lot of these characteristics and you will further develop them during the course of the PhD. And so yeah, if you can find a way to apply those in the financial realm as well, I mean you’re going to be a superstar, basically. Just by the characteristics that brought you to the stage of training that you’re already at. So, I really, really totally agree with this point. I think something that you said that people don’t necessarily acknowledge is if they take a step back from the treadmill of consumerism, they might think, “I have to live this way forever. I have to be frugal forever. I have to say no to buying X, Y, Z forever.”

You Don’t Have to Be Rich in Order to Be Frugal

27:27 Emily: But the thing is that if you can take that step back from consumerism for a period of maybe a few years and really get your finances solid underneath you, and really do things like investing in yourself and increasing your income and so forth, you can add–I mean consumerism is kind of a negative word–but you can add mindful spending back in after a period of, you know, stepping back from it, if you just again, have some wherewithal to your finances. So, for example, something that is a common criticism of frugality tips that are disseminated is that you have to already have money to be frugal, right? So, stuff like buying in bulk or like what you were just saying, actually, buying an investment piece of clothing that’s a little bit more money instead of multiple cheaper pieces of clothing that aren’t going to fall apart faster.

28:19 Emily: Well, you do need money upfront to do those things. So, a common criticism of frugality is you have to be rich to be frugal, right? It kind of doesn’t make sense. But the thing is that it doesn’t take that long of building up some savings or something to have enough money to start taking those frugal steps that do require an upfront investment, which of course not all of them do. And so, it might be that, “Okay, yeah, I’m just going to go on a spending fast for three months. At the end of the free three months, I will be able to take all these other frugal steps, which will then be able to fund me starting to spend again.” So, it doesn’t have to be a forever sacrifice. It can be a short-term thing that can then sort of catapult you to greater and greater ability to build your wealth. Does that make sense?

Inching Toward Investments: Take Your Time

29:04 Hajer: Totally. And I had a couple of comments on the frugality. Because I used to actually think like that, too. I used to think, “You know, frugality comes from a relative place of privilege.” To be able to think–and even the comment on fast fashion that I brought up, I was listening to a podcast and one of the key women who tried to really vouch for sustainable fashion. She works with a lot of celebrities. She talks about the fact that if you really calculate how much money you are spending on fast fashion, you could easily buy a couple of those things and investment pieces. So, again, it’s the idea–and like you mentioned as a PhD student–you know, really understanding where’s the investment worth being put in. And another really important point that I wanted to say is, I don’t think it’s wise to do all these changes all at once.

29:54 Hajer: To be like, “Okay, that’s it. I’m kind of all out. I’m changing everything I wanted to change.” There are of course going be habits that trickle in and that’s totally fine. But it’s again thinking that you’re responsible for your wealth, your financial management. So, what are the steps that you think you can do? And then start from there and slowly build in. So, you know, if you want to be a little bit more frugal or you want to go on a spending fast, but you want to make sure that you have some money initially just in case, then make that your priority and you’ll sort of focus on that. So, these are all gradual tips that require time to sort of get back on your feet of comfort with your money and comfort with your finances, but it’s important just to start somewhere and then, you know, build from there.

30:41 Emily: Yeah, I think that the idea that you have to revolutionize everything in your life at once to be successful with money is another one of those limiting beliefs that isn’t true that we tell ourselves as an excuse to getting out of doing anything. So, when I think about my own journey–when I started my business, Personal Finance for PhDs, it was when I finished graduate school and I had already attained a great deal of financial success at that point. And so if you looked at me at the end of graduate school and saw, “Okay, she’s got her stuff together, she’s budgeting, she’s saving, she’s investing, paying off debt, all that stuff.” It’s easy to overlook the seven years between college and when I finished my PhD that it took to get to that point of success. And I did not start off doing everything right out of the gate, right? This is something that I learned very gradually over time, and yet still, by my own definition, obtained a great deal of financial success several years later. So, it’s not that you have to exactly be like me or exactly be like you or exactly be like someone else you hold up as a model, like a financial mentor or something. You don’t have to instantly transform to be that person. It’s okay for it to take years. It will still be effective if you make slow changes. In fact, probably more so because it’s more sustainable.

Personal Finance Really Is “Personal”

31:55 Hajer: Exactly. And also take into consideration your personal situation. So, many PhD students live at home, so of course they don’t have the very high rent to pay. And of course that makes many things easier. Many PhD students are supported by other individuals that help them out. And some PhD students, again, are living in a more difficult financial situation in the sense that they have to pay rent and they’re solely responsible for themselves. So, take in your situation, and really think about what are the actionable steps that I can do, what are the beliefs that are holding me back? How do I change those? And again, it will take years to be really comfortable with the way that you want to spend money, and that’s completely okay. And there’s never the best way to money. There are certain things that some people may think, “Oh, you don’t need to spend on that.” But I personally like to and I’m okay with that. So reaching that place where you’re confident and comfortable in your money spending, it takes many years. But like you said, it’s always worth it. But it’s always important to take in your personal situation and your personal wealth and not try to compare your situation to someone else’s.

33:02 Emily: This is actually one of my favorite things about personal finance, is that it is intensely personal and intensely individual and there is not a cookie-cutter solution that’s going to work for everyone. It’s a challenging thing for me as a personal finance educator, but it’s just something that makes it such a rich field to be in. I want to get back to this question of mindset. Are there any more comments that you want to make about how to break this mindset, this accepting of the culture of being broke?

Encouraging Open Dialogues About Money in Grad School

33:29 Hajer: I think the first thing I want to say, like we mentioned, this culture is very, very persistent. This mindset is very, very hard to stay out of. Like sometimes I find, even though I’m totally against it, I find that I say things about the whole broke culture of being a student. In terms of breaking the mindset, it’s just always important to understand what being broke means and what us casually saying the word means. Many people, as we mentioned, do have some level of finances that they can spend. If you find that you are able to spend money, you’re technically not broke. So, you just think about that, and then take the steps that you want to take to get more financial freedom. And also just, I think it’s really helpful to bring up the conversations around your colleagues, whether that’s in school, your classmates, those in your lab.

34:22 Hajer: I do that often in my lab. It’s quite a big lab. So, we often talk about money and what does it mean to have money in graduate school. And sometimes if someone says, “Oh, you know, graduate students are always broke,” it’s important to sort of chime in and think, “Okay, well why are we broke? How do you break those down? Is it something that we just think in our head?” So, that’s why I think this podcast, I really gravitate towards it. Because it is just trying to have that conversation started. And I think that’s the most effective way to break that down because it’s hard as an individual, even if you got over that, just sort of change the culture around you and it will always creep into your mindset. But just starting the conversation, it doesn’t have to be on a podcast, of course.

35:02 Hajer: Individually, it’s really important to talk to the people around you about money and not make money a very taboo topic. Because I think if people don’t talk about how they’re spending money and all they talked about is the fact that they’re broke, it’s really easy to be like, “Okay, yeah, sure.” But to be more open with money and not have it very taboo I think will really help spearhead discussions of what does it mean to be in graduate school and have money. Like, how are the best ways to spend my stipend?

Call to Action: The Importance of Budget Breakdowns

35:32 Emily: This is one of the reasons why I really love doing the budget breakdown episodes that I have done in the past. In my first season of the podcast, I did 50% of the interviews were budget breakdowns where I think it was all graduate students except I did my own as well. I think it was all graduate students and talking about, “Okay, this is where I live, this is how much I make and this is how I spend it and these are my financial goals.” And it’s something that I’ve continued with the podcast, although not at the 50% frequency, but I just want to point out that I love these local examples, right? These very relatable examples. If someone else from that same institution living in the same city hears that particular podcast, that’s an easy way to start a discussion–not necessarily even with the person who was interviewed, but just someone else like, “Oh my gosh, I heard this thing and that person is spending how much on rent? And that means that they can turn around and do this with their finances. I wonder how I can find a place where I can only spend that much on rent?” Or like, “Wow, they meal prep their food and that means they only–you know.”

36:25 Emily: But it’s really valuable to see those local examples that are very, very relatable to you. Because it’s very easy to dismiss, as we were talking about before, frugal tips or something as something that doesn’t apply to me because I live in X , Y, Z and this is my particular situation. Well, if you end up talking to people who make the same amount of money that you do and live in the same place that you do, it’s a lot more relatable and their strategies are a lot more translatable. And frankly, you’re more likely to hear them if you listen to them. If you hear them from someone who you can identify with in those other factors. So, this is basically just a call for any listeners, please volunteer and submit your budget breakdown. Volunteer for a budget breakdown episode because I love doing those and I’m not really getting that many volunteers for them now, which is why we do a lot of other types of episodes. But anyway, I still love them. They hold a special place in my heart and I think they’re really valuable.

37:11 Hajer: I love them as well. On YouTube, I think Glamour magazine on YouTube has a lot of budget breakdowns, particularly in individuals in very expensive city like New York, San Francisco. And again, it’s really nice sort of think about how someone else spends their money and then you can translate that into thinking about how you spend your money. Another tip is, the first step if you’re going to take one actionable step, especially to break down the whole broke culture, is to really calculate how much money is going in every month, how much money are you spending? And that way you can numerically counteract the idea that, “Oh, you’re broke.” Because if it’s the, “Oh wow. After all the money that I get and after I spend it, I still have $400, like I’m not really a broke.” So, I think it’s really getting in tune with how much you’re spending. But because of the way the culture is right now, not many people are in tune with their spending habits. So, again, falling into that very broke culture. It’s very easy.

Tell Us More About Your Podcast Team

38:07 Emily: So, I understand you are part of a podcast team as well. So, what is that podcast and how can people find it? What is it about?

38:15 Hajer: So, it’s called Raw Talk Podcast, and essentially it’s a science communication podcast headed by students in the Institute of Medical Science at the University of Toronto. And essentially what the team tries to do is take these really key topics that people are interested in and go to scientists and ask them about their research and the latest discoveries of those topics. So, we’ve covered a wide array of topics such as autism spectrum disorder, the circadian rhythm, mental health in graduate school. And the idea is just to help you know, the general public and everyone understand what is the latest research and how do we best understand some of these topics that are not always well-represented in the media or that people may be curious in. You can find it on Facebook, Instagram, any podcast app, and Twitter and it’s just Raw Talk Podcast. And on Instagram, there’s a lot of new content featuring our guests and some really cool science tips or science fun facts. So, we really just try to break down some of the complex parts of science and be able to translate it using very local researchers that many people can Google and email.

39:31 Emily: This is such a fun way for people to get involved in science communication, I think. I mean I love podcasting obviously, And I just think it’s an amazing medium. And so, this is something that I know has been started. This kind of thing has been started at many other universities as well. And so, I mean if this is something that attracts you about potentially communicating science from your own university and you don’t want to take it all on yourself, it’s a really good idea to get a few other students together who are also interested in the same thing and start it up together and kind of spread the work around. So, that’s exciting. How long has this podcast been going on for?

40:06 Hajer: When the summer finished, which was about April, May, we just finished our third season, so we’re starting our fourth season in September.

How Else Can You Be Reached?

40:18 Emily: Great, great. Okay. And how else can people find you individually?

40:23 Hajer: Sure. So, I recently just started a science communication account myself as a science student and also moreso to share the graduate student experience and experience with research and academia. What does it look like, particularly being from more of an underrepresented group? I really wanted to share what that looks like, navigating academia and research. So, my main platform right now is Instagram, but I do hope to branch out and start blogging. But my Instagram is, @itshajernakua. So, I T S H A J E R N A K U A. And yeah, it’ll be really nice. And I try to share tips of grad school, tips about finding passion with research, and I’m also starting to get more into financial and money tips as a graduate student.

41:08 Emily: That sounds amazing. Okay, well, thank you so much for coming on the podcast and sharing this wonderful content.

41:14 Hajer: Thank you so much for having me. This is my first podcast being interviewed, not interviewing. So, this is really exciting.

Outtro

41:20 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 PhD’s 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.