Hello fellow Mustachians,
I stumbled on this lovely blog around a week or so ago and have since been feverishly devouring the wisdom contained in MMM's posts. I have already made some (small) modifications to my lifestyle and plan on making many more in the weeks, months, and years ahead.
Before I ask my questions, some background on myself:
I'm currently 24 and am working as a research assistant in several different labs. During the day I earn an hourly wage, and in the evenings and weekends I volunteer my time to a research project which I am overseeing. My income is quite low at the moment, roughly 25K annual take-home pay. I have chosen to forego a higher salary in order to gain research experience which I hope will serve me in graduate school.
I will be applying to several graduate programs at the end of this year, both Master's and PhD programs. Each have their own distinct advantages and disadvantages. My understanding is that Master's programs generally have higher admissions rates (15-30%) vs PhD programs (2-10%). Most MS programs only last 2 years while as these days doctoral programs take 4-6 years. It is also very common to follow this up with a lengthy, low paying post-doctoral fellowship. MS programs are generally unfunded, although there are opportunities to receive scholarships and teaching assistantships. Competitive PhD programs are usually fully funded. Reading about the possibility of attaining financial independence has made me rethink my career trajectory--I will get to this later.
I have always been a relatively frugal person, but reading MMM has kicked my frugality muscles into overdrive. I am currently paying $400 in rent (this will bump up to $415 next year) and roughly $60 for all utilities and internet. If I can convince my roommate not to use AC, I can probably reduce this. I live in a university town, so the only way I could find housing for significantly less would be by moving farther from my place of employment. I cook all my meals, so my goal is to spend no more than $200 monthly on food (this would be lower but I buy a lot of produce since nutrition is a top priority for me. Plus I subsist on a 3000 calorie diet due to working out 5-6 days a week). I currently spend around $30-$40 a month on gas. This is because I like to visit my family every 4-5 weeks or so, and they unfortunately live 85 miles away. I use public transportation on most days and am currently hunting for a good bike on Craigslist so that I can reduce my driving further.
Fortunately, I am not saddled with student loans or any other debts. After college I spent the bulk of my time volunteering for a research project, and it is only in the past year that I have been able to work a decent number of payed hours weekly. As such I am somewhat behind given my age--I only have approximately $12,000 saved up. Realizing that this money was depreciating sitting in a savings account, I perhaps foolheartedly invested $10,500 into a Betterment account. In retrospect I should have consulted with this forum before making such a move. I know that it's wiser to manage your own investments to minimize fees, but I'm still learning about the basics of investing and feel more comfortable having a robo-advisor manage my 'Stache for me for the time being. I hope to transfer this to Vanguard accounts in the next year or so once I've read some investment books.
Having typed up that wall-of-text, let me get to my questions:
1. How should I invest my savings for the next year or so while I've saving up for grad school? I don't know if it's good idea to put my money into an IRA given that I may need it to pay tuition and other expenses in the next few years. Should I continue putting my money in Betterment, or is there a savvier alternative? If I use Betterment, what allocation of stocks and bonds should I use?
2. Given the lack of funding in academia and the surfeit of PhDs in the United States, I'm seriously reconsidering pursuing a doctorate. Master's programs are looking more attractive since after completing one in two years I could potentially get a job earning 50-70K. Since I'm learning to live the Mustachian way of life, this would be sufficient for me. My goal is to become at least semi financially independent by the time I'm 40 in 16 years. I don't know if I can achieve this if I spend 5 years working on a PhD and then 2-4 more years in a post-doctoral position. Plus, the kind of academic/teaching positions I'm interested in are very hard to come by and don't pay particularly well. Given all this, is pursuing a Master's degree the more sensible choice?
I'm new here and am just beginning my journey towards FI, so I welcome any and all advice. Thanks for taking the time to read my ramblings!