Author Topic: Feedback request - blog post on finances for grad students?  (Read 2670 times)

csprof

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Feedback request - blog post on finances for grad students?
« on: September 02, 2016, 07:30:07 AM »
I've clearly been spending too much time thinking about retirement planning (and not enough research).

If anyone has a moment to provide feedback on my blog post about finances for computer science grad students, I'd be grateful:

https://da-data.blogspot.com/2016/09/finances-for-cs-phd-students.html

In particular, I tried to strike a reasonable balance between being general and somewhat encouraging the frugal path through grad school, but if you had ideas for how I could, say, subtly sneak in a link to an MMM post in there....... <grins>

Thanks!
« Last Edit: September 02, 2016, 07:49:19 AM by csprof »

ender

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Re: Feedback request - blog post on finances for grad students?
« Reply #1 on: September 02, 2016, 08:06:54 AM »
Honestly, my thoughts are it's way too tl;dr.

You basically write off the motivation for grad students to live even more frugally by saying "you might make $300k soon!" which seems counter productive.

Also, not sure how much your grad students get paid, but when I was in grad school I definitely did not make $2500 a month (nor do others at my school currently).

rothwem

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Re: Feedback request - blog post on finances for grad students?
« Reply #2 on: September 02, 2016, 08:23:39 AM »
Honestly, my thoughts are it's way too tl;dr.

You basically write off the motivation for grad students to live even more frugally by saying "you might make $300k soon!" which seems counter productive.

Also, not sure how much your grad students get paid, but when I was in grad school I definitely did not make $2500 a month (nor do others at my school currently).

Out of curiosity, how much do the grad students at your school make?  I'm assuming you're talking about the sciences, since that's really the only place where grad students actually get paid, but an NSF grant stipend is something like $34,000. 

I've got a lot of friends that got PhDs, and the lesson learned about finances is to spend as little as possible and try to limit the bleeding as much as possible. You're probably not going to save any meaningful amount of money since you're stuck in your location that's usually a high COL area.  Living in a college town usually means inflated rents, so rent is going to eat a lot of the stipend.  Since most college campuses have limited and expensive parking, it means you basically have to live within bike or bus distance, which bumps your rent cost up even more. 

csprof

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Re: Feedback request - blog post on finances for grad students?
« Reply #3 on: September 02, 2016, 08:45:40 AM »
Honestly, my thoughts are it's way too tl;dr.

You basically write off the motivation for grad students to live even more frugally by saying "you might make $300k soon!" which seems counter productive.

Also, not sure how much your grad students get paid, but when I was in grad school I definitely did not make $2500 a month (nor do others at my school currently).

Ah.  Point - thank you.  I'll try to refactor that a bit.

Edited to add:  I've rewritten that paragraph, added a link to an interview with MMM, and emphasized more the benefits of living within your means.  Thank you!

Re students:  I believe students at CMU earn about 2500/month, but I don't know the exact number.  This is common across the top schools, but the variance is high.  (I was earning about $2k/month 12 years ago when I was in the Ph.D.)
« Last Edit: September 02, 2016, 08:56:40 AM by csprof »

ender

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Re: Feedback request - blog post on finances for grad students?
« Reply #4 on: September 02, 2016, 08:51:35 AM »
Out of curiosity, how much do the grad students at your school make?  I'm assuming you're talking about the sciences, since that's really the only place where grad students actually get paid, but an NSF grant stipend is something like $34,000. 

I've got a lot of friends that got PhDs, and the lesson learned about finances is to spend as little as possible and try to limit the bleeding as much as possible. You're probably not going to save any meaningful amount of money since you're stuck in your location that's usually a high COL area.  Living in a college town usually means inflated rents, so rent is going to eat a lot of the stipend.  Since most college campuses have limited and expensive parking, it means you basically have to live within bike or bus distance, which bumps your rent cost up even more.

The NSF stipend is super plush for grad students.

At my university, PhD students in CS made around ~$1700 a month (they also had paid tuition). It is definitely enough to save money with, but the overwhelming majority of PhDs are not rolling in extra money. A previous roommate of mine (incidentally in CS) was able to move money to his Roth IRA since his living expenses were low.

markstache

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Re: Feedback request - blog post on finances for grad students?
« Reply #5 on: September 02, 2016, 08:55:35 AM »
As a current grad student, the numbers seem fine to me.

1. Too much info. Just tell 'em about the Roth.
2. Additional option if they "have too much money" is to place voluntary contributions into a Roth 403(b). My experience is that grad students can elect to contribute, but of course it is not matched. This is most useful if the 403(b) has access to index funds (e.g., TIAA-CREF).
3. On the behavioral side, play up the fact that their peer group is in the same bucket so there is little pressure to keep up with the Joneses. Game nights, the occaisonal night outs, renting a movie together: fun and cheap.
4. In the right market (e.g., low cost of living), consider buying a home when starting grad school. You can rent out a room to another student (and you should never have a problem with vacancies since you have a connection to a great pool) and you can elect to keep the house as a rental property after you graduate. This doesn't make sense everywhere, but it is worth running the numbers.


csprof

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Re: Feedback request - blog post on finances for grad students?
« Reply #6 on: September 02, 2016, 01:42:59 PM »
As a current grad student, the numbers seem fine to me.

1. Too much info. Just tell 'em about the Roth.
2. Additional option if they "have too much money" is to place voluntary contributions into a Roth 403(b). My experience is that grad students can elect to contribute, but of course it is not matched. This is most useful if the 403(b) has access to index funds (e.g., TIAA-CREF).
3. On the behavioral side, play up the fact that their peer group is in the same bucket so there is little pressure to keep up with the Joneses. Game nights, the occaisonal night outs, renting a movie together: fun and cheap.
4. In the right market (e.g., low cost of living), consider buying a home when starting grad school. You can rent out a room to another student (and you should never have a problem with vacancies since you have a connection to a great pool) and you can elect to keep the house as a rental property after you graduate. This doesn't make sense everywhere, but it is worth running the numbers.

Ah, thanks - I hadn't been aware that any schools permitted 403(b) contributions.  Is that explicit in yours?

Behavioral:  Done & done.  Thanks for the suggestion.

(4)  It is.  I'll think about this - a few of my Ph.D. students have done this, and in Pittsburgh, it works pretty well.  I didn't know anyone who managed it in Boston, though. :)

markstache

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Re: Feedback request - blog post on finances for grad students?
« Reply #7 on: September 02, 2016, 01:57:21 PM »
403(b): To quote my current institution (large midwest state university):

Quote
All University employees who receive a W-2 from the University may participate, as long as they are able to contribute the $200 minimum annual contribution amount.

This was also my experience while working on a grant at another large midwest university.

4: It is all about location. This might be useful:

http://www.nytimes.com/interactive/business/buy-rent-calculator.php

letired

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Re: Feedback request - blog post on finances for grad students?
« Reply #8 on: September 02, 2016, 02:05:22 PM »
403(b): To quote my current institution (large midwest state university):

Quote
All University employees who receive a W-2 from the University may participate, as long as they are able to contribute the $200 minimum annual contribution amount.

This was also my experience while working on a grant at another large midwest university.

4: It is all about location. This might be useful:

http://www.nytimes.com/interactive/business/buy-rent-calculator.php

When I was a masters student, my university had a 457 and 403b, but I couldn't contribute as a grad student, so mileage varies. I actually just checked the website, and it looks like either I was wrong at the time, didn't have enough money to contribute past my IRA limit so it wasn't worth it, or they changed the policy. Once I was a lab manager, I could contribute, but there was no match as I was automatically enrolled in the pension system and was not eligible for the 403b match. I did manage to shovel a bunch of money into the 457 though, so that was good!

csprof

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Re: Feedback request - blog post on finances for grad students?
« Reply #9 on: September 02, 2016, 05:57:51 PM »
403(b): To quote my current institution (large midwest state university):

Quote
All University employees who receive a W-2 from the University may participate, as long as they are able to contribute the $200 minimum annual contribution amount.

This was also my experience while working on a grant at another large midwest university.

4: It is all about location. This might be useful:

http://www.nytimes.com/interactive/business/buy-rent-calculator.php

When I was a masters student, my university had a 457 and 403b, but I couldn't contribute as a grad student, so mileage varies. I actually just checked the website, and it looks like either I was wrong at the time, didn't have enough money to contribute past my IRA limit so it wasn't worth it, or they changed the policy. Once I was a lab manager, I could contribute, but there was no match as I was automatically enrolled in the pension system and was not eligible for the 403b match. I did manage to shovel a bunch of money into the 457 though, so that was good!

Fascinating - thank you both!  I've updated it to point out that people should look for the Roth 403(b), added a link to the NYT rent-vs-buy calculator, and added a bit about HSAs, though I haven't found many universities that offer high-deductible plans for Ph.D. students.  (Grumble, grumble, my university doesn't even offer an HSA option for faculty & staff!)

CanuckExpat

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Re: Feedback request - blog post on finances for grad students?
« Reply #10 on: September 03, 2016, 12:36:15 AM »
Not sure how technical you want to get, but there is a potential gotcha for some grad students who want to contribute to a tax advantaged account, depending on how the university decides to pay them: http://evolvingpf.com/2012/03/earned-income/

My only other quibble would be talking about "retirement".. I think most grad students see that as so far off that why would they care, and they assume they are going to be doing work they love for ever. I'd more uptalk the FU-money aspect and the flexibility it affords you.

I think gradschool is a great place to get started on the path to FIRE, you live below your means, you are surrounded by smart fun people who don't care how much you spend, and you learn a healthy disdain for social conventions :)

csprof

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Re: Feedback request - blog post on finances for grad students?
« Reply #11 on: September 03, 2016, 08:01:12 AM »
Not sure how technical you want to get, but there is a potential gotcha for some grad students who want to contribute to a tax advantaged account, depending on how the university decides to pay them: http://evolvingpf.com/2012/03/earned-income/

My only other quibble would be talking about "retirement".. I think most grad students see that as so far off that why would they care, and they assume they are going to be doing work they love for ever. I'd more uptalk the FU-money aspect and the flexibility it affords you.


Both good points - thank you!  I've linked to the earned income article and swapped a bit of FU-money-discussion in place of retirement.

Quote
I think gradschool is a great place to get started on the path to FIRE, you live below your means, you are surrounded by smart fun people who don't care how much you spend, and you learn a healthy disdain for social conventions :)

*grins*