Major Pay Decrease - Advice?

Hi everyone! I am hoping for some advice on budgeting and staying out of debt!

I plan to go back to school to get my PhD in Clinical Psychology. This has been a dream of mine for a long time coming! The downside is that I will go from making a real salary of about $60k/yr to $20k in a stipend. I'll try my best to pick up some side hustles but I'm not allowed to get another job. I've saved a lot since using YNAB but I would like to avoid using savings as much as possible. For more context, average rent for one beds are $1500/mo where I would be living.

Anyone have any helpful advice? Thanks!

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    • Vibrant
    • No more counting dollars, we'll be counting stars
    • vibrant
    • 3 mths ago
    • 3
    • Reported - view

    How much of  your $60k/yr are you currently saving - how much are you actually *spending* per month? If you're saving half your income and living on ~30K year, that's a lot less of a drop to deal with than if you're saving $10K and spending $50K.

    What's the rent on a 2 or 3 BR? If a 2BR is $1800 and you can find a roommate to split the rent down the middle, that's a savings of $600/mo over living alone. Or rent a room in a larger house with several roommates. Reducing your housing cost is probably going to be your biggest opportunity to slash your budget, if you're serious about not using your savings. Shared housing also leads to opportunities for splitting other living expenses like  Netflix, internet access, etc. Even food, sometimes.

    What's your vehicle situation? Can you get away with no car for a few years? Is there reliable public transit or will you be expected to have your own transport once you start clinicals?

    Food - do you cook? Do you currently shop/eat frugally?

    Without more specifics on where your money is currently going, it's hard to give more than generic advice, but these are some places to start.

    Like 3
      • Alex
      • ottobot
      • 3 mths ago
      • Reported - view

      Vibrant I'm saving about $20K a year between retirement and regular savings. I think the roommate idea is an absolute necessity at this price point, so I appreciate that input. 2br are about 2000 a month, but still offers a good amount of saving. I didn't think about the other expenses it may cut!

      My car is completely paid off so I'm hesitant to get rid of it. I could probably save almost $300 a month if I didn't have it between gas, parking, and insurance. My other hesitation is that clinicals are often off campus in areas that aren't always accessible by public transit. I won't know until my second or third year. My parents also live about 2 hours away, so it would be nice to be able to see them without having to find a carpool/pickup situation.

      I could definitely stand to eat out less. I probably spend about $500 a month on food with a pretty even split between groceries and eating out. I tend to get lazy about it because I was already saving so much money, but I will have to tighten my belt when it comes to that kind of spending. I really appreciate all your advice!

  • Congratulations on pursuing your dream!! 🎉

    One of the best things you can do is model your new budget and start living on it now. Try a Fresh Start in YNAB and re-prioritize based on your new income. Where will you make adjustments? Save the rest!

    It also seems like a good time to do a "January Burndown" where you look at every single item in your budget and reconsider if you should still be paying it, if you can do it differently, or if you'd like to spend more on it.

    Like 3
      • Alex
      • ottobot
      • 3 mths ago
      • 1
      • Reported - view

      Dela Thanks so much for this suggestion! I have some serious impulse control problems when it comes to eating out or buying unnecessary items for my home. I'll have to really work on this!

      Like 1
  • Others have offered good general advice, now I'll offer something specific to academia.  Academia's view of money is *weird*.  Most schools, when they admonish students not to work (yuck), don't tell you that vaguely research-related income, or side income that builds status for the university, generally doesn't count.  So, consider building one or more of the following income streams to bolster your financial situation without running afoul of institutional mandates:

    • Honoraria - there's usually a per-event limit on what you can make, but getting paid for public speaking doesn't count as a job in academic-land and is usually encouraged.
    • Licensing and royalties- write software and license it, license a research data set (if the uni doesn't own it), license materials you've written, collect royalties on a book or article you've written, whatever...usually allowed and without any limits as long as there's no conflict of interest
    • Grant review panels - Both NIH and NSF routinely pay the outside experts they bring in to review grant submissions.  A typical grant review process is 2-3 days of meetings (full or half days, depending on the complexity of the grant and number of potentially viable proposals), and will net you a few-hundred-dollar stipend for your service if it's virtual and you don't have to travel...more if travel is involved.  Bonus: serving on these looks *really* good for you in academic circles.  Make some friends at the agencies and get in the habit of doing 2-3 of these per year for extra cash.
    • Grant funding - most schools don't allow non-PhD researchers to apply directly for grants, but some do.  Most will let you be "Senior Personnel" on another researcher's grant.  This basically turns into additional hourly-income work for you, but it doesn't count as getting a job in the university's eyes: to them, you are doing research in your field.

    When a university says "don't get a job" it's more of a loyalty test than a concern with your income.  They want to see you dedicate the time you're doing your degree to only this to increase your income, find sources of income that the university considers part of that pursuit.

    Like 6
      • Alex
      • ottobot
      • 3 mths ago
      • Reported - view

      HedgeMage Wow! I appreciate the specificity here! What area of academia do you work in?

      I did find out that I will likely get a research assistantship, which pays more than a teaching assistantship at this school. So funding will likely be $21-25K and increasing every year.

      My main concern with a lot of these suggestions is that I don't know that I'm qualified to gain funding this way. I've been working in clinical psychology research for about 3 years since graduating, so I don't have any kind of notoriety or the level of skills required to gain positions like these. I will admit I don't know much about honoraria or licensing, so I'm not sure how you go about doing it.

      I have looked a little bit into grant funding. Many of the students in the program I have talked to have grant funding, but not until the third or fourth year typically. A few of the students even admitted to taking out loans to make up for the low stipend in the first few years.

      • HedgeMage
      • Tomato_Thunder.11
      • 3 mths ago
      • 2
      • Reported - view

      Alex I'm a cybersecurity researcher, but I also have a background in psychology.  Ironically, the reason I'm so crafty at this is that I have done it all without a degree.  I love what I do, but not only can I not afford to live like a monk (I'm the breadwinner for our family), I come from a very poor background and helping people like my parents get out of that situation means that I must increase my income over time, not take time off from earning a living wage.

      Once you get named as "Senior Personnel" on any grant (not uncommon, even for PhD students), getting onto a few review panels should be totally do-able.

      The possibility of getting extra income through involvement in grants varies incredibly by university.  Some of them have fairly limiting policies re: doctoral students and grants, others are quite flexible and open.

      In my humble opinion, the easiest road is non-academic publishing.  You won't make a bunch of money off a book or podcast directly, but doing it well tends to bring the opportunity for paid speaking gigs or running paid trainings at conferences, as well as various types of follow-on sales.  You can still list non-academic publications on a CV, grant proposal, etc. but it's easier and more ethical to profit from them.

      I could ramble for a while, but those are broad strokes.  Feel free to direct message me if you'd like to chat strategies, we could continue by email or set up a call.

      Like 2
  • Way to go for you! I just wrapped up a PhD in counseling last year. I kept up with full time work (and part time teaching) until halfway through the program, and then cut my full time clinical case load in half. I cannot tell you how we were able to make all the ends meet, but we did. YNAB helped a TON. We planned and stuffed away funds to help when our income went down, and we also built up our practice as much as we could to provide a bit of passive income. I think timing was essential for us — I’d waited 5 years from when I had originally wanted to go back to school, and I’m glad we did that. Also my spouse and I did the program “together” as much as possible. We planned and executed as much of daily life within a graduate program as we could. For us, that was a life saver. Looking back I can’t believe we were able to come through that intense journey, but we’re glad we did. It stretched us!

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