Out of the blue, our department chair just sent an email saying stipends will increase by 12.5% next year. That follows a 6% increase this year. I assume that our top rivals increased stipends significantly, and this is in response.
Sure, we still make less than the grad students in CS, but today I'm too pleased to care!
For the past three years or so, my husband has worked on a side project with a friend of his on his own time, under the direction of a PI at the same institution where he works full-time (his boss knows about the project and approves, but this has nothing to do with his full-time job).
By most measures, this project has been very successful. The product has been licensed by the institution, taken on by several producer/distributors, and demand was high for it before it was even available. They've even earned a few consulting jobs in order to assess a company's needs and see how their product might help.
Obviously, my husband and his friend were awarded the right to royalties by the institution. The royalties are laughably small -- about $2/unit -- but it was always more about working on a cool project with his friend than any expectation of a giant windfall (and hey, it's some passive income that the pf blogosphere is so wild about!).
But it's been about nine months since the first unit was sold, and we haven't seen a dime! Because payments were to be quarterly, at the extreme end we could understand a six-month lag. But nine months? My concern is not that the institution will stiff him; I know that they will pay eventually. This is bureaucracy, not fraud. But I believe that this behavior will cost the institution money. Here's why:
This is not a niche project with a few applications: this is a very general product that could sell many, many units with the right support. (Also, the institution makes a lot more than my husband does; more like $20/unit.) But my husband and his friend are not under any sort of contract and they have no obligation to keep working on this project; in fact, my husband is losing interest. Now that we're thinking seriously about having kids, he's thinking hard about ways to bring in some additional income, and when brainstorming yesterday I suggested spending time seeking companies that might be interested in the product and proactively contacting them about its merits. He was not interested in this at all. Now admittedly, primarily this is because he's a tech person, not a business person, and I think he considers hustling a little unseemly. But I think he would have done this a year or two ago because his enthusiasm for the product was so strong. But in the absence of royalty checks to make him still feel connected to the project, he's ready to move on. Most likely he will move onto something that has no affiliation with the institution and will make no money for them. So instead getting his labor to help them sell more units which they profit from and getting their name out (the institution is obsessed with getting press and being thought of as a top institution), they'll get nothing.
Bureaucracy has its costs.
Our recent close out of one of my student loans really gave us a taste for paying down debt. We make our monthly payments on the car, the mortgage, and my student loans (well, not the federal one because it's not currently accruing interest!), but we've generally funneled our extra money into savings, not debt repayment.
I think that's going to change.
Our new plan is so long as our emergency fund is above a certain threshold, we'll put all extra money towards paying off debt. If our fund falls below the threshold because, say, we have to pay to repave the sidewalk in front of our house, then we prioritize replenishing it. (The threshold is above 6 months of living expenses, so that it always stays a true emergency fund.)
Depending on how many unexpected expenses we come up against, our car could be paid off in 1.5 more years instead of 4.
Last night my husband and I were having a financial summit to clarify what recurring bills I'm still paying -- we wanted to transfer all these to A. so that, but for a few hundred in my monthly cash spending, all of my stipend goes into savings. Just for simplicity's sake.
Looking online at one of my three loans (all with different companies), we noticed that the balance was only $1800, and this was with the terrible loan company -- awful website, BS fees, etc. (It also had the highest interest rate.) "Let's just pay that sucker off!" A. said, so we did.
Original principal of $8,000, now completely done with!
We're going out to dinner with a stash of forgotten gift cards we found yesterday. Not quite a mortgage-burning party, but I'll certainly enjoy it.
I generally spend very little time regretting bad financial decisions (if I did, would I still be spending $150/month on soft drinks?). But recently, a mistake has come to light that I think will be causing me waves of nausea every time I recall it over the next two weeks:
Every year my husband and I dutifully go through most of his (and formerly my) employer's open enrollment package. This package covers all non-PTO benefits, such as health, vision, dental insurance; life and long-term-disability insurance; and health care and dependent care reimbursement accounts. We've been doing it either as singles or as a couple for six years, so it can be pretty routine.
But, you know, it's a long binder. So after we read through all the changes to the four different available medical plans -- even the ones that aren't ours, just in case the changes make them more attractive to us than they've been in the past -- and once again weigh dental and vision options, which has become more interesting to us after having spent $1200 on a root canal and crown combo of mine that was hardly covered by insurance, we get a little worn out and don't always finish the binder. After all, the very end is just the long-term-disability insurance, which I know is very important for kids our age and we already have maxed out, and life insurance, which we already have through State Farm, which also carries our auto and homeowners' insurance.
But this year, being in no particular rush yesterday afternoon and enjoying our time together doing Adult Things, we decided to continue onto the regions of the binder we usually ignore. The first section was LTD, and we ended up deciding to buy a new option that improves the cost-of-living increases for LTD payouts, because it was $3/month.
Then we got to the life insurance section. (Note that currently I have $125k in life insurance via State Farm, and my husband has $60k via work that he gets for free as some percentage of his salary. The imbalance is mostly due to inertia; if anything, he should have the higher coverage so that I could finish my degree even if I lost him.) The rate, for people under 30 like us, was $.07 per thousand dollars in coverage per month.
7 cents per month per thousand. That seemed really, really low.
"What are you paying for State Farm?" my husband asked. Sadly, I had no idea. So I went to look up my latest bill. Astonishingly enough, for what I'm paying for $125k in coverage, we could instead be buying $721k in coverage through work! And to top it off, the first $50k of coverage is paid with pre-tax dollars!*
Sickening. Just sickening.
So what have we decided to go with? In total, my husband will have $250k in coverage and I will have $92k. Our family will have $160k more in coverage for $40 less per month. And we've learned a hard lesson about always reviewing all the options available to you.
* To be precise, for people who care about these sort of details: technically, the full premium is taken out of pre-tax dollars, and then the premium prorated by (total coverage - $50k)/(total coverage) is counted as imputed income, on which we must pay income taxes.
A month ago I spent $235 to book 8 weeks' worth of personal training in weightlifting.
I played sports in both high school and college, but we were never taught proper form; the coaches would point us to the weight room and say "Go lift". Most of it is pretty straightforward -- the Nautilus machines have clear instructions, and there are all sorts of lifting plans online -- but I wanted something more customized, especially given chronic health issues of mine.
So far I've been extremely satisfied. We've had four weeks working on a particular plan, and next week we'll switch to a different one to finish out the summer.
I'm really enjoying my summer too much to think or worry about money. Even when I do, I rarely do anything practical like calculate change in my net worth or figure out how quickly I can pay off the student loans if I increase my monthlies by $100 -- more often I sit around calculating how much I would have to make so that A. could stay home with the kids yet we could still afford this house:
Answer: About $90k.
A. and I have been talking about putting less into his 403(b) and opening a Roth IRA, for two main reasons:
It will probably have to wait until after the summer, both because we'll know how much we cleared from my summer job and because there's already going to be enough long-distance paperwork to deal with.
As we approach having $40k in savings and bonds, my husband and I have started to think about cutting back on putting $1100/month into savings and instead go into massive debt-reduction mode. But how to proceed? It's fairly complicated when you have to contend with not just varying interest rates and balances, but the differing tax benefits -- we can deduct some student loan interest payments, along with mortgage interest. However, while the student loan interest deduction is its own line on the 1040, the mortgage interest deduction only applies if we itemize, and we usually don't.
What we've decided to do is a pseudo-snowball method: we will pay off the smaller debts first, but not for the reasons that Dave Ramsey emphasizes. Motivation really isn't a problem for us. As you can probably tell from the fact that we have $40k in cash, we're fairly risk-adverse and prioritize a sense of financial security. We'd feel more secure by having fewer monthly obligations, and monthly obligations tend to disappear only when the entire debt is retired. For example, we'd hate to put $10k extra (beyond the monthly payments) into paying off our $16k car loan only to have A lose his job -- so long as money remains on the loan, our payments stay just as high. We'd rather use that $10k to retire my smallest student loan, thereby totally eliminating that monthly payment.
I think this makes fine financial sense because none of our interest rates are too onerous -- all are under 9%, and in fact the smaller accounts tend to have the highest interest rates, anyway. Thus we're not facing the issue of paying off a 4% student loan while making minimums on, say, a 29% credit card, which makes the whole plan not only comfortable for us hazardphobes, but quite possibly the most financially optimal thing we could do anyway.
The advice I was given about dress for my summer job is "business casual, but you should wear a suit on the first day", suggesting that they lean to the business side of business casual.
I've been a graduate student for two years, and worked in research for four years before that. My business casual wardrobe is non-existent, so I've been doing a lot of shopping.
Here's what I've settled on:
That's $1110 for two suits, three pairs of pants (if you include the suit pants), a belt, a briefcase, and four dress shirts! Luckily I have a good number of stylish pairs of business dress shoes, so at most I need another pair or two. Plus some dress socks, and possibly a necklace or two. All in all, that should run another $150 or so, for an approximate total of $1250. And that doesn't even include enough shirts to get through the week without doing laundry! And lucky for me that this is summer only, so I needn't worry about a nice professional coat or sweaters.
Could I have cut the price? Well, certainly. But two factors worked against me:
On the plus side, in between using http://naughtycodes.com/ and calling from the store to place an order, I managed to spend only $15 in shipping, including all the returned clothing that didn't make it into the final cut above.
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