How a Professor in the Southeastern U.S. Does Money
Robyn (not her real name) is a 32-year-old professor in the southeastern United States.
So, Robyn, how much are you making?
This year I made $60,000 plus a 7 percent match for retirement. (I contribute 9 percent.) I also make some extra money through grants.
What kind of grants?
This year I got a $3,000 grant to attend a conference. (It was a “$3,000 max” grant, so even though I only spent ~$2,000, I didn’t get to keep the extra $1,000.)
I also got a $5,000 grant to do research outside of the U.S., and a $500 grant for using open access or free textbooks in class. That last grant was straight-up cash, which I like.
Got it. What about your expenses? Where is your money going?
Good question. My expenses are fairly similar to the last professor you interviewed. I have rent, donations, eating out, groceries (which includes household goods), phone, electric, transit, internet, and other. (Other is pretty varied, from shoes to yoga to the post office).
I also have some yearly expenses that I track separately, like car and house insurance, my estimate for car repairs, what I thought I’d pay in taxes. Fortunately, I got a huge refund; less fortunately, my new state either does not collect enough taxes or is hugely corrupt so there is a dearth of public services. I’ve lived in two states, and they were both controlled by Republican governments the entire time I lived in them. I also have to pay car tax, thanks to the aforementioned insufficient income taxes.
I have health, dental, and vision insurance and extra retirement taken out of my account — and, given the tax reform, I upped my retirement contribution by about half my raise.
I max out my Roth every year. According to the retirement calculators (that include Social Security, which, LOL, will not exist when we’re old) I have more than enough to retire if I want to live at around 80 percent of my current income.
You have more than enough to retire right now? Or you’ll have more than enough if you keep saving at this rate?
I’ll have more than enough if I keep saving at this rate and retire when I’m 65.
Not bad, considering all of those recent news stories warning Millennials that they should plan on working until age 70. Do you anticipate being able to keep up that level of savings? How do you see your income and expenses changing in the future?
Oh, good question. I am saving for a down payment, and the city where I live has a pretty low cost-of-living, so I think that with a 15-year mortgage my housing costs would rise only slightly. My mortgage costs would be lower than rent, but there are also home repairs to consider!
I view it as highly doubtful that I will find a partner and have a family, so those expenses are unlikely to happen.
I also feel very fortunate that my parents are well set up for retirement. I have one sibling, who still has not found steady work (just graduated) and I would help him and his partner out, but I don’t think that will be necessary — which I am also thankful for.
But healthcare. Who knows how much that will cost?
I read an article saying it’ll cost $280,000. From retirement age until death, I guess.
Ugh. I guess I should up my HSA contributions.
Are you working towards (or do you have) tenure? Can you anticipate job security for the next however many years?
I am working towards tenure. I anticipate job security for another three years (I’m probably going for promotion early since I held another academic job prior to this one) but I guess six more years at this rank is possible. That gives me a lot of freedom, I think, to decide how to spend my money.
Wait, just to clarify — you anticipate job security for only the next three years? Once you get tenure, you have job security for life, yes?
Yes, but if I didn’t get tenure, then I’d have to find another job.
Ah, got it.
So back to your comment about freedom. How are you using that freedom to make decisions about your money?
I was thinking about this this morning, in two ways. The first is that, for the first time since I graduated from my PhD program, I have more than enough money to live a life I enjoy.
Like, I don’t spend money on all the things all the time, but I can spend money on some of the things most of the time. This means I don’t feel deprived (which leads to impulse purchases); it also means that I can try and spend in ways that align with my values.
What are your financial values?
I grew up very religious, to parents who are very liberal, and would consider myself a moderately religious person. So I have this strong value of “I have a lot, other people have less, I should do something.”
This attitude towards charity is problematic, but we live in a capitalist society and I have not personally seized the means of production so I do what I can. I like to try and shop at small businesses (which was strangely easier when I lived in a tiny town), and I try to buy things used or borrow them (again, easier when I lived in a tiny town) and donate my money.
How do you decide how much to donate?
I grew up with the idea of 10-15 percent pretax, but I am not as generous as my parents. I also like to say things (in my head, to them/my guilt) like: you’re Canadian, you have healthcare, and the tax codes discriminate against single people.
I do 10 percent post-tax, and have fallen behind this year because I am waiting on travel reimbursements, so will rectify that at fiscal year end.
I find the news very depressing. In previous presidential administrations I was also depressed, because issues I care about (abortion access, actual pro-choice health care information dissemination, comprehensive immigration reform, ending all forms of incarceration/policing until they stop disproportionately affecting African-American, Latinx and Native American people) were similarly not addressed. So I donate to local orgs that deal with these issues (work with death row, work on state level legal reform, and national abortion access funds).
I think donating to grassroots orgs is great, and the ones I have donated to have a presence in local press so I can see if they are sketchy or not. Just because something is grassroots doesn’t mean it isn’t sketchy!
Ideally I would put half my donations towards these causes, and give the other half to a church, but I had been trying this one church and then I just could not anymore, so I stopped.
I want to go back up a bit and ask about that “you’re Canadian” reference — did you grow up in Canada and then move to the U.S.?
Oh yes. I had also brainstormed talking about how expensive immigration is. I immigrated (in the colloquial but not legal sense of the term) for my job.
Did you originally plan to work at a Canadian university, or did you want to work in the U.S.?
I would have preferred to stay in my home country, but I vastly prefer being employed. There are a lot more universities in the U.S., and a lot more research happening in my field.
Literary studies. There’s (I think) more humanities research in general happening in the U.S., in a more cultural studies vein. Billfolders can look up Stuart Hall, who made this movement popular like 30 years ago. (For the academics on the ‘Fold, there are other ways to do cultural studies, but his is probably the most influential.)
Did you have to learn different ways of doing money when you immigrated? Are there “financial culture shocks?”
The biggest shock was stupid fucking credit scores. Mine is way better than it used to be, but my history is only four years old because I stupidly closed my oldest card after a year because it only had a $500 limit.
Also, getting a bank account was a huge hassle, as well as being able to have a debit card where I could spend more than $500 a day, which sometimes is necessary. HAVE YOU EVER BOUGHT A PLANE TICKET. (I used PayPal.)
Other shocks: the U.S. is very backwards about PINs on credit cards. The card readers in Canada are way faster. And there are so many banks in the U.S.!
I’d agree with you about those Canadian chip readers. And yeah, if you don’t have a credit history by a certain point as an adult, you are really limited in terms of how much credit you can get.
Also I think credit histories are super discriminatory. because I am sure my white, suburban/urban, educated, very deliberately friendly voice helped me get things when my credit rating wasn’t that good. I had to pay a deposit for my electric bill (which we call hydro in Canada), and it was super annoying to set up my phone (I could link it to my Canadian credit card for a while, thankfully).
But hey, if you’re going to live in the U.S. for the next 30 years (or more) you’ll have plenty of time to build up that credit score!
Exactly. So many years to fight the system. Get ready, USA! (Canada has many of the same problems I mentioned earlier; they just don’t make it to the news as often because our current Prime Minister is hot.)
So… how long did it take before you felt like you had your financial shit together? Did you make any big financial mistakes?
Some mistakes that come to mind: not buying good shoes and nice suits earlier, except I was a grad student and couldn’t.
What other shit have I spent too much money on? (I am deliberately not looking at my spreadsheets for this.) I spent over $100 on a meal in Lima (Peru) that was not worth it at all.
I also went some months without car insurance. Don’t do that. I didn’t have a car, so it wasn’t like I was driving without insurance (that would have been epically dumb) but if you plan to own a car in the near future, get insurance now.
Why do you recommend getting car insurance if you don’t have a car?
Because insurance companies look at your history, and if you haven’t had insurance for a while, your premiums are higher.
Ah, like your credit score! In that case, it’s probably too late for me.
I think I finally got my shit together in my second year of working. I had been tracking my finances for a long time and I felt like I finally had enough to save for travel and retirement, and donate a bit.
What did you use to track your finances?
Excel. All the way. It’s easy, and it requires some effort from my part so I can’t just check out.
Spreadsheets are the best. Even though I use Mint, I have a separate spreadsheet to examine my finances at a more granular level. And yep, you can’t just check out — although I could see people procrastinating on their spreadsheet the same way they procrastinate on reviewing their budgeting apps!
I have done that more often recently. I think I may move to a more monthly check-in style (I do a total earnings/savings check in with all my accounts around quarterly) because I feel pretty good about how my money is being spent.
That makes sense. Is there anything you’re worried about financially in the near-term future?
Not really anything I can control. I’m worried the current president will tank the U.S. economy, which will have a negative impact on me, and that cuts to social programs will increase income inequality.
Yeah, I’m worried about both of those too.
And Kennedy just retired. Ugh. This world.
I guess there’s only one question left, then: what advice do you have for Billfold readers?
This is something people have said elsewhere, but know where your money goes.
Also, think about your values. Does your spending reflect those values? Does your spending help you accomplish your goals? Sometimes it’s hard to change your spending because you need to earn more money or get a job that doesn’t make you hate your life, or any number of things. It’s a process, and many people do not have the luxury of time to think about these things so we should be thankful for that. Lots of love for the ‘Fold.
Final advice: EVERYONE READ BOTH OF NICOLE’S BOOKS.
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