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.

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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.