Author Topic: Calling all frugal PhD students  (Read 1534 times)

OneFrugalScholar

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Calling all frugal PhD students
« on: August 24, 2013, 08:25:59 AM »
Greetings everyone,

I'm a newcomer to MMM but have been a long time practitioner of frugality and have over the past few years focused on investing my savings. I am also a doctoral student living off of a stipend. I've seen a few odd posts here on the forum from folks mentioning their pursuit of a PhD and a frugal lifestyle, so I wanted to try and gather us together here on this thread to share our stories and share ideas.

I myself am a twentysomething social sciences PhD and have a stipend of $23,000 per year. I'm seeking to save $10,000-$13,000 of that per year and to do a max contribution to my Roth IRA. The rest I am putting into various index funds.

I am always tinkering with ways to save money, but mostly I stick to the basics of riding my bike to school, avoiding eating out, home brewing, and generally slaying my utilities bills. I am also seeking to start up some side hustles for a bit of extra income through using my carpentry skills as a weekend gig. This allows me to take a nice break from the taxing academic work too.

As much as I love the focus on FI on this blog, I also am a bit wary about folks over-emphasizing getting to FI as quickly as possible as opposed to pursuing something they love along the way. I realize FI is the door to doing things you love all the time. But I also love the scholarly life and cannot see myself working a desk job for five years just to get a bit ahead.

Enough about myself, however. If you are a PhD or graduate student, holler out here. I'd be curious to hear how you approach your finances and maximizing your savings from your stipend.


beltim

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Re: Calling all frugal PhD students
« Reply #1 on: August 24, 2013, 11:57:56 AM »
As someone who's wrapping up their PhD studies, I can give you some advice.  Unfortunately, some of it is what I *should* have done rather than what I did do.

First: make sure your stipend counts as earned income.  For my first 5 years in grad school, my stipend wasn't, and so I wasn't eligible to contribute to an IRA.  A quick check on whether your stipend is earned income is whether you pay Social Security tax on it. 

Second: the biggest contributor to my cost of living was housing.  There's lots of suggestions on MMM to cut down on housing costs, most of which are straightforward (like roommates, though I've usually found that having roommates increases your non-housing costs).

Third: I completely agree with your approach to FI.  The opportunity cost of my pursuing a PhD instead of getting a high-paying job out of college is financially huge, but the ability to do what I want rather than something that pays well is crucially important to quality of life.

2527

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Re: Calling all frugal PhD students
« Reply #2 on: August 24, 2013, 12:11:05 PM »
I observed that being in academia allows people to live and enjoy a frugal lifestyle.  Many people don't make a lot of money, those that do didn't always, and prestige comes as much from one's thoughts and published articles as from one's possessions.

Albert

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Re: Calling all frugal PhD students
« Reply #3 on: August 24, 2013, 02:16:17 PM »
I graduated already 7 years ago so I can't give a current advice, but out of curiosity why do you wish to save so much from a meagre salary? If you do everything right with your studies you'll triple or quadruple (at least) your income in 5-7 years. It will be vastly easier to save then assuming you don't inflate your lifestyle massively.

I think I saved about 10k in my 5 1/2 years of grad school from a very similar income. I still think it was just fine...

drg

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Re: Calling all frugal PhD students
« Reply #4 on: August 24, 2013, 05:13:26 PM »
Another PhD student chiming in, biological sciences.  My stipend is roughly 17-18K per year ($28K), "roughly" because I am partly paid in dollars so the exchange rate factors in.  However, I only receive this amount for 3 years, but generally people here take 3.5 to 4 years to complete (UK).  To account for this, I knew I needed to save ~1/4 of my stipend each year to give me enough money for my last year, but I ended up saving closer to 35%. I live in one of the most expensive cities, probably 2nd only to London in terms of COL.

Before this, I did a 2 year MSc. on $18K/year (Canada).  I managed to save about $11K of this.  I've been super fortunate to have no student debt from my undergrad, and my grad tuition has been paid by scholarship (extra to stipends).

My approach has basically been as yours is---don't own a car, bike everywhere, keep the heat low and the lights off, eat cheap, play cheap.  Eating cheap for me is a fun challenge---I like coming up with recipes that have a low cost/serving but still taste kick ass, and I like cruising the "discount" section for perfectly good food (Tenderstem broccoli for 30 pence? Yes please!).  My hobbies are mostly riding my bike, college sports or pick-up games with friends, with exception to one STUPID EXPENSIVE one (horseback riding) that I'm hoping to reduce the costs through volunteering.  Even though I cut close to the bone with respect to expenses, I don't feel that I'm really missing out on much, although I am beginning to wish I was able to own my own home.

My "side-hustle" is applying for extra funding.  I have been pretty successful at this.  At the end of my MSc., I was awarded a travel stipend to visit a lab in Europe for several months, during which I was effectively paid double salary.  I recently received another 3K grant to supplement my savings for my 4th year, another 750 for travel, free conference attendance...  If you want to stay in academia, these are useful CV points that may be more beneficial to you than any non-related side hustle cash.  To me it seems that a lot of people don't try for these, but in my mind, you can't get one unless you apply, and they're going to give it to someone, so why not you?
« Last Edit: August 24, 2013, 05:41:47 PM by drg »

impaire

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Re: Calling all frugal PhD students
« Reply #5 on: August 24, 2013, 05:54:22 PM »
My "side-hustle" is applying for extra funding.  I have been pretty successful at this.  At the end of my MSc., I was awarded a travel stipend to visit a lab in Europe for several months, during which I was effectively paid double salary.  I recently received another 3K grant to supplement my savings for my 4th year, another 750 for travel, free conference attendance...  If you want to stay in academia, these are useful CV points that may be more beneficial to you than any non-related side hustle cash.  To me it seems that a lot of people don't try for these, but in my mind, you can't get one unless you apply, and they're going to give it to someone, so why not you?

Nice perspective! I was going to laugh at the idea of a "side hustle" (my program overworks us cruelly in the first two years, which i am wrapping up, so the idea of another job just kills me), but I should definitely start applying for grants now that I will actually have some time and obligation to do research work. I actually do have a mini side-activity (I RA for a prof in addition to expected TA duties), but so far I have not been able to give it enough hours to make it matter financially. That's not my goal anyway.

I worked for ten years, and made a nice six-figure salary when I decided to change careers. And no, it's not going to pay off in terms of $$$, since I plan on going into teaching... Hence a decision to reduce my expenses instead. I'm not too materialistic, but used to spend a LOT on experience (food, travel, plays and concerts, etc.)--I've found it much easier to reduce these budgets now that I'm surrounded with people with less money, less fondness for material possessions, more enthusiasm for reducing their environmental impact, etc. The reduced leisure time also sure saves me money :p

So anyway, nice to see this thread, nice meeting you all.

lhamo

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Re: Calling all frugal PhD students
« Reply #6 on: August 24, 2013, 10:59:58 PM »
14 years out from completion of my Ph.D., I applaud you all for taking this approach -- it will serve you well.  I didn't start actively working on my financial situation until I read Your Money or Your Life in 1997.  At that point DH and I were thankfully free of student loan debt, but we had pretty much been living stipend check to stipend check.  In 1998 we put the maximum in IRAs for both of us.  In 1999 we graduated debt free and with a little bit of savings, and went straight into jobs that earned us a combined $100k.  That was pretty awesome!  We moved to Manhattan and had the amazing luxury of living in a shared townhouse in the middle of the Village that was owned by our employer while we looked for more permanent housing.  That took several months -- to be truthful we weren't in a huge rush to move out of such a sweet deal, and they didn't set a limit on how long we could stay so we didn't feel guilty taking advantage of it.  Ended up buying a nice coop in Queens in a gentrifying neighborhood. 

Throughout all of this, and for a long time after, we pretty much continued to live as grad students, more or less living on 1/2 our income and resisting the urge to "upgrade" our lifestyle.  Best thing we ever did.  Living costs went up dramatically when we moved to Beijing a few years ago, but at this point, 14 years into our jobs, we really are pretty much FI if we want to be.  We'd just need to sell our apartment and move back to Seattle, where we could have a very nice lifestyle working intermittent or part-time jobs.  Not a bad idea, and one I continue to throw around.  And all of this has been done while we have had decent, but not incredibly lucrative, jobs in the non-profit sector.  It isn't like we're in investment banking or high tech sectors.  I MAY be getting a significant promotion/raise in the next few months, which is what mainly has me hanging on in Beijing.  If that weren't in the offing I'd be pushing DH much harder to consider locking in our gains on our apartment and relocating/retiring. 

Anyway, just wanted to say that from this section of the road I think the path we took was definitely the wise one.  Avoid debt at all costs, and do try to save something when you are in grad school.  It gives you freedom to consider your options, and trains you to live a lifestyle that will make you very wealthy, and hopefully very happy, many years down the road, even if you stay in a profession like academia where wages are not particularly high. 

cats

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Re: Calling all frugal PhD students
« Reply #7 on: August 25, 2013, 11:35:12 AM »
I wrapped up a 7 year stint in grad school (masters, then PhD at a different school, both in environmental science) almost exactly one year ago, so I figure I'm still allowed to chime in with my perspective.

In terms of earned income lost, grad school (especially the PhD) is terrible, but it is a great opportunity to grow your frugality muscles.  You have a lot more freedom in how you spend your time, which helps a lot in getting started.  After grad school, I moved into industry and make 3-4x my student stipend, but by continuing to practice the same frugal habits I developed in grad school, my savings rate has really accelerated!

I graduated at age 30, having worked for 1 year before starting grad school, earning what was essentially a grad student wage ($25k/year, whoo!).  My stipend ranged from $20k-35k/year (I had a fancy ass fellowship for 3 years which was 30k, one bumper year with fellowship+some extras, then the remaining years at a more normal stipend of $20k).  When I graduated, I had a net worth a little over $50k, and I had also paid off about $12k in student loans.  I didn't closely track my savings rate for much of my time in grad school, so I'm not sure exactly how much of that is actual savings vs. investment growth (though I started seriously investing money right *before* the 2008 crash.  Oh yeah, and the PhD part of grad school was done in a rather pricey part of California--my rent was betweeng $750-850/month for 5 years, and that was considered really bargain rate.

Some stuff I was lucky with: I went to a really cheap undergrad college and got out with minimal debt.  Also, my parents sold me their old car for $2k, which spared me the hassle of a dealership and the sinkhole of a car loan (though I'm still not 100% certain this was really "luck" as I then had to insure and maintain the thing!).

Things I was actively careful about: Always going for the cheapest housing I could find (as long as the area was not totally crime-ridden and was within biking distance of school/groceries, I was not picky about location/ambience--this will save you a TON of money and it only requires the upfront investment of time to look for a good place), limiting going out (try to organize cheaper social activities like potlucks instead), use the library for entertainment, bike/walk/bus everywhere, and pretty much never going to the mall or otherwise engaging in recreational retail activities.  Camping weekends instead of going somewhere that would require a hotel.  Generally evaluating whether or not something was really going to add value to my life before plopping down money for it.

As far as whether or not you should be trying to save aggressively, my advice is to treat it like a job, don't count on having a fancier better job later.  Sure, you probably aren't going to save 75% of your income, but do as much as you can and at least try to max out the IRA.  Some people will make 3-4x their stipends right after grad school, a lot of people will wind up as postdocs or adjunct professors earning $40k/yr for a while.  Of the ~10 people who graduated in my cohort, I think only 2 are making 6 figures, most are earning in the $40-50k/yr range, and then a few others are in between those two ends.  I have another friend who just finished and as of yet has NO job lined up, which is not as uncommon as you might think (another friend did a PhD and 2 postdocs and has now been seriously underemployed for several years).

I'm not saying people should be totally depriving themselves, but just think critically about your spending and whether or not you are really getting anything out of where your money is going.  I had so many friends who did things like buy coffee on campus daily, or go out to dinner once or twice a week just because.  Or who just HAD to live downtown, even though it was more expensive (and even though you could easily drive or take the bus there on the weekends, if you needed your going out fix).  These friends wound up with credit card debt or student loans or debts to the bank of Mom and Dad.  No fun.
« Last Edit: August 25, 2013, 06:02:28 PM by cats »

OneFrugalScholar

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Re: Calling all frugal PhD students
« Reply #8 on: August 25, 2013, 02:03:48 PM »
Thanks all for your replies and reflections on your own experiences thus far! I can only agree about the organic opportunity graduate school provides for exercising frugality. I also appreciate the sentiment that being a graduate student is equal to holding a real job, and that you should approach it as such and seek to maximize savings.

I wanted to make one comment on side-hustle income. I really dig the idea of seeking to maximize funding opportunities through applying to outside fellowships and grants. I just sat down yesterday and made out a detailed list of all the fellowships my university provides that may be applicable to me in the next year or so. I figure that if they are there, I absolutely should apply and see what comes of it.

My main venture right now is to turn my passions and hobbies into small income sources. I greatly enjoy woodworking and have consistently found that working with my hands is a great way to decompress and get a break from the mind-focused work of academia. I figured I could turn this passion into a income-generator through dedicating 2-3 hours per week to it. It's been a great relief from schoolwork. I began by making simple pieces for friends and family. These have led to a few commissions that I've worked on the past year or two that earned me a nice sum. I also am entertaining the idea of opening up a small store on Etsy, specializing in small gifts made out of wood. These ventures are not huge generators of income, but they help contribute to my bottom line, and with such a small salary, I figure anything I can save will be helpful.

mulescent

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Re: Calling all frugal PhD students
« Reply #9 on: August 25, 2013, 03:23:56 PM »
Hi there,

I am six years out of a Ph.D. in chemistry, and here are my suggestions:

1) Focus, work hard and keep your eyes on the long game.  Many Ph.D. students spend time on irrelevant stuff or get distracted by their peers.  Remember why you are in graduate school and make sure that you move the ball forward each and every day.  If your side gig is primarily recreational and consumes recreation time, great.  If it cuts into time you would/could spend working on getting out of school, then I would ditch it.  Your income will rise (hopefully dramatically) when you graduate and the single biggest thing you can do to improve your financial situation is to move on.

2) You can't get (too much) blood from a stone.  Your income is very low and you probably have very significant demands on your time from school.  My advice is to be frugal and get into good habits, but also realize that you will struggle to make big financial gains until you finish your degree (see #1). 

Good luck!

Albert

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Re: Calling all frugal PhD students
« Reply #10 on: August 25, 2013, 03:40:38 PM »
Hi there,

I am six years out of a Ph.D. in chemistry, and here are my suggestions:

1) Focus, work hard and keep your eyes on the long game.  Many Ph.D. students spend time on irrelevant stuff or get distracted by their peers.  Remember why you are in graduate school and make sure that you move the ball forward each and every day.  If your side gig is primarily recreational and consumes recreation time, great.  If it cuts into time you would/could spend working on getting out of school, then I would ditch it.  Your income will rise (hopefully dramatically) when you graduate and the single biggest thing you can do to improve your financial situation is to move on.

2) You can't get (too much) blood from a stone.  Your income is very low and you probably have very significant demands on your time from school.  My advice is to be frugal and get into good habits, but also realize that you will struggle to make big financial gains until you finish your degree (see #1). 

Good luck!

My PhD is in chemistry as well and I fully agree with you, but OP is in social sciences. Perhaps the dynamics is very different in that area?

supermatthew

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Re: Calling all frugal PhD students
« Reply #11 on: August 25, 2013, 04:20:14 PM »
My PhD is in chemistry as well and I fully agree with you, but OP is in social sciences. Perhaps the dynamics is very different in that area?

Uh oh... he went there!

Albert

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Re: Calling all frugal PhD students
« Reply #12 on: August 25, 2013, 04:24:14 PM »
My comment was not meant as some kind of sophisticated putdown if that is what you are implying! I've just never met anyone doing a PhD in social sciences and don't know the conditions for grad students in those departments.

cats

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Re: Calling all frugal PhD students
« Reply #13 on: August 25, 2013, 06:17:04 PM »
I second (third?) the advice about being careful with the time devoted to side hustles.  I have a side gig writing knitting patterns that I worked on during grad school, and occasionally I did let it eat up too much time.  I still haven't decided whether or not I *really* regret it (I really love the job I have now and it had only just come open around the time I was graduating), but there's no denying that I probably could have finished up a bit earlier if I had put my mind to it.  I wasn't as bad a some people though, who get lost in side activities and turn those into their top priorities rather than focusing on finishing up and getting out.

OneFrugalScholar

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Re: Calling all frugal PhD students
« Reply #14 on: August 25, 2013, 06:55:29 PM »
It seems to me that pursuing a PhD in the Social Sciences and or Humanities is a bit different than pursuing one in a Science. This observation is just based on my own experience and the experience of my peers. While Science PhDs are spending a ton of time in lab, Social Sciences and Humanities students are primarily in the library.

I agree that a side hustle should never take the place of the primary task: getting the darn degree finished! But I also think that graduate students need healthy outlets and a change of pace from the academic work life. I also feel like pursuing a side hustle instead of, for instance, logging onto Facebook, is a much better usage of time. Ultimately I think each student needs to find his or her right balance. You can spend 60-80 hours a week working on your research, overwork yourself, and consequently put in an 80% effort, or you can spend 40-50 hours a week chipping away at it, take appropriate breaks, and approach your work with much greater concentration and focus.

backyardfeast

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Re: Calling all frugal PhD students
« Reply #15 on: August 25, 2013, 09:39:32 PM »
5 yrs out of a PhD in the Humanities.  Being frugal while at grad school is great, as there's always an "I'm a student" rationale for living low-cost, and lots of student discounts on everything from transit to museums, etc.  To this day, although I wasn't on the Mustachian train at the time, I am VERY proud that I graduated with little student loan debt, and managed to save enough each month to fly home to visit my SO (now DH).  My best tips were enjoying roommates, not smoking (!), keeping bar drinks to a minimum, walking everywhere, cooking lots, ... the usual stuff.

But I wanted to add that I think the biggest thing about grad school is to do what you need to do to stay sane and finish in a reasonable amount of time.  Grad school is incredibly draining and hard work no matter how great a time you have.  Don't put too much OTHER pressure on yourself.  Your income will go up when you're done, and then the biggest challenge is to stay on the grad school budget when you earning more.  5 years out we own a house, 2 cars (used), commute, and have a sailboat.  We are happy, but I sometimes wish we had stayed on the grad school standard of living! (OK not really.  But sort of. )

Also, remember that many of those awards and scholarships are taxable income, and the income tax may not be deducted before you get the cheque.  Find out ahead of time, and put aside the tax if necessary--surprise bills at the end of the school year are not fun! :)

Enjoy your program!