Upcoming Transition and a Potential Financial Overhaul
I believe I’ve mentioned this a few times on the blog but haven’t explained the full scenario: Kyle is striving to finish his PhD this spring (or, less optimistically, over the summer). He is currently looking for his first post-PhD job, a postdoctoral position, which is essentially additional training in the lab of another faculty member and will last 2-5 years. Good news: this job transition will come with approximately a 40% raise over his current stipend and possibly better benefits. Bad news: it is very unlikely that Kyle’s next position will be in the Research Triangle, so we will have to live apart until I finish my PhD, a year or so after he finishes. The prospect of living apart is so painful that my brain shies away from thinking about it most of the time (even as I talk/write about it), but it’s quite common – most dual PhD married couple I know have lived apart for at least a few months during the graduation/job transition process.
Even though we’ve experienced almost no savings from combining households, I admit that much of Kyle’s raise could be eaten up by his new living expenses if he moves to a higher cost-of-living city (which is likely). But still, I expect that we will have some additional disposable income as we try to keep our lifestyle un-inflated or even cut back on entertainment and other extras so that we can devote some spending money to traveling to see each other.
I think this first big transition would be a good time to overhaul our accounts structure and start saving for some mid-term goals. There are many aspects of our finances that I imagine someone with an outside perspective would want to correct, such as our tiny emergency fund and our random “nest egg” account. We also need to start saving for a down payment for a home once we move to San Diego (*fingers crossed*) and for our next car.
My proposal for how to change up our financial structure after Kyle has set up his independent household:
1) Repair and reregister my car so that I can get around Durham, then make two “Cars” savings accounts – one for insurance/registration/taxes/permits (regular expenses) and one for repairs + saving for our next vehicle.
2) Throw our “nest egg” into our emergency fund and continue saving there until we get to a reasonable level (defined by our new expenses – probably three months or 6-9 k$).
3) Cut back our retirement savings to 10% and save at least another 10% toward mid-term goals – the down payment and new car funds together (not sure of the ratio).
4) Get rid of most of our short-term targeted savings accounts (since our spending will no longer be predictable) in favor of 1) a line item for “whatever” in our monthly budget and 2) two savings accounts, one that buffers our checking and one for travel so we can visit one another (in addition to the Cars ones).
5) Once I graduate, pay off my student loans with our earmarked savings/investments and throw the excess earnings into our down payment fund.
As of now Kyle and I plan to keep our finances totally joint while we live apart, but I would like to research and write a short series of posts on how other married-but-apart couples handle their money to help us adopt best practices. If you want to volunteer to be ‘interviewed’ for that series, please leave a comment on this post or send an email to evolving pf at gmail dot com.
Stay tuned for more discussion on the finances of married couples living apart, Kyle’s job and new-home search, and our decisions through this transition!
Have you ever lived apart from your spouse and how did it affect your finances? Have you ever used a major life transition to clean up your money management? What mid-term goals are you saving for right now? What do you think of my proposal?
photo from Free Digital Photos
Filed under: budgeting, transitions · Tags: graduation, mid-term goals, money management, separate households, short-term goals
When to Start Saving for a Mid-Term Goal
If I Were My Financial Advisor, What Would I Tell Me?
When Top-Down and Bottom-Up Budgeting Clash
Awesome Financial Benefits to Being a Grad Student (and Terrible Detriments)37 Responses to "Upcoming Transition and a Potential Financial Overhaul"
Leave a Reply
Recent Comments
- Adam on Home Equity Is Funny Money
"Hi Emily - I just stumbled upon your blog. Great post! Up in Canada this is a…" - Emily on Home Equity Is Funny Money
"I agree that an appraisal is the best number to work with. I can't think of why …" - JL on Home Equity Is Funny Money
"I only note it as round numbers, in $50k or $100k estimates. I also usually upda…" - We Maxed Out All Our Retirement Accounts for the First Time! - Evolving Personal Finance | Evolving Personal Finance on Avoiding an Expensive 401(k) Plan through Self-Employment
"[…] was the first year that we contributed to Kyle’s expensive 401(k…" - Business Goal Tracking for Week 8 of 2022 - Evolving Personal Finance | Evolving Personal Finance on Business Goal Tracking for Week 6 of 2022
"[…] Done as of two weeks ago! […]…"
Its awesome that you are able to start saving for retirement in grad school. When I was in grad school I figured I might as well wait until I got a job and made a bunch more money. Now I see how valuable it is to invest even a little bit as soon as you can. Good luck living apart, at least it will be an adventure!
Ross recently posted..Health food that’s half the price of fast food
I believe the PhD program is too long to put off retirement savings when we have the excess money to do it. If we had our same stipends in a high cost-of-living city, that would be different, but luckily Durham is very reasonable. We aren’t saving a lot of money but it is a significant percentage of our income. We’re trying to create good lifelong habits instead of considering this an exceptional time in our life.
Aww…you gotta do what you gotta do but that doesn’t mean it’s fun. Good luck to Kyle in the job market.
I’ve lived apart from my husband for short periods of research every year, and I’m heading out for another 3-5 months on Monday. It’s definitely more expensive, what with rent in an extremely costly area (I sublet from a friend of a friend at below market price, but you’d still be shocked), gas and bus tickets because it’s much less walkable, and travel to see each other, which we try to do twice a month. All in all, it adds up to around $900-1000 more per month! To cover the additional expenses I’ve gotten two small grants and taught an extra course, which has covered everything so far except a couple visits, which we paid for out of our regular stipends. This spring we’re also getting a subletter, who will not pay much because our apartment is honestly not a 2 bedroom, but everything helps!
So far I’ve kept money set aside for living apart in a personal instead of our joint account, as I don’t want to be spending grant-based money on groceries, but it’s been pretty easy to just pay for a limited class of research-specific expenses out of that account and do everything else that’s part of normal life (buy groceries, pay bills, get gas or tickets to visit each other) out of joint checking. If I didn’t have the grant responsibility concern, I’d have no problem just keeping all our money joint, since we both have to pay rent and buy groceries even if it’s in different places.
This is actually one area in which having separate small “allowances” helps though, because if my husband had to tell me every time he had happy hour with our friends when I wasn’t there, and I told him every time I bought used books to help me get through being bored and lonely, instead of us doing things together, it would just be sad. (We do tell each other that stuff, but we don’t HAVE to.)
Hm, that’s an interesting system you’ve chosen for managing your grant money. What exactly is the money given for – research expenses or living expenses incurred from having to move short-term? Does anyone audit how you spend the money?
I can see how our mutually-enforced frugally might start to slip once we’re living apart, especially if we want to entertain ourselves more. I’m just hoping that I’ll be too busy trying to finish up and Kyle will be too busy starting his new job to spend much extra money.
Research expenses and living expenses while doing long-distance research are not distinct categories, given that the living expenses are a requirement of doing the job, not a personal choice or part of your normal cost of living. Granting agencies for long distance research (whether field, lab, or collections-based) tend to cover travel to research sites and approved specific living expenses while there as well as equipment, supplies, or access fees. There are often restrictions, e.g. you can’t use the money for visits home or to go to conferences. All of the ones I’ve applied for have required up front budgets, and for the small grants I’ve received, I included only living expenses that are directly required by research and that I would not otherwise be purchasing, like rent while away and transportation there, and not things like groceries that I would have to buy anywhere I lived (even though some technically allow that), or transportation for personal reasons.
When you’ve budgeted out expenses and had them approved, it’s pretty easy and feels necessary to keep it separate, even though the grants I’ve received so far require reports but not receipts (alas, NSF has not seen fit to favor me with buckets of money). One thing I wish I’d done was keep receipts for research in 2012, though – grants are taxable income but I think work expenses are tax deductible. Oh well.
And you two might just stay busy, but I wasn’t necessarily saying you’d be influenced to spend more, just that having separate entertainment budgets has been helpful to us. We’re not spending more on it, it’s just that now I can’t join the happy hours, so I buy books instead.
Best of luck during this transition time!
I usually do use life transitions as an excuse to clean up the budget and re-vamp my financial goals. I find that the renewed focus helps to achieve the goals I set even faster. It also helps me to have some consistent focus when life seems to be filled with change.
The Happy Homeowner recently posted..Personal Finance and Lance Armstrong: What You Can Learn from Lance’s Fall from Grace
Very good points! I hope we’ll experience something similar.
Best of luck during your transition! We’ve never lived apart and I an certainly understand the feelings behind it. I think you’re taking a good approach with your savings plans and looks like it will definitely help you out for the upcoming transition.
John S @ Frugal Rules recently posted..Taking the Plunge: Budgeting and the Entrepreneur
Thanks! It’s horrible but necessary. We were long-distance for over a year while we were dating and I think it was good for each of us AND our relationship to have that period – maybe we’ll see something positive come out of this as well.
Best of luck! Lets hope that he finds a job somewhere near.
Marissa @ Thirtysixmonths recently posted..How to Ask for a Discount
The nearest city I know he’s looking at is flying-distance. :/ Ideally he would move across the country as that would be a strategic placement for the careers we want to have in San Diego.
That is a really tough decision – even though we aren’t married yet, I can’t imagine living without him, especially not across the country. At least there will be an end date set on this so that’ll make it a little easier. You two definitely seem to have a strong relationship which helps also. Good luck! I think you have a great plan in place.
Kyle @ YPFinances recently posted..Personal Training: My Reflections
There’s not really any other option for us that wouldn’t derail (in Kyle’s case) or trash (in my case) the careers we’ve been working so long for. Many new PhDs can stay in their same labs for a short-term postdoc, which for us would be the ideal situation, but Kyle’s advisor let him know a while ago that he couldn’t fund that option. So there’s really no way around it if I want to finish my PhD and he gets the kind of postdoc that will train him appropriately. I am an experimentalist and Kyle is looking for a lab-based postdoc so we won’t be able to work remotely the majority of the time (maybe in the very last stages of my PhD). Unfortunately there won’t be a set end date until only a few months before it’s over as the PhD is fairly open-ended and how fast I work, as well as some things out of my control, will affect the length.
Thanks for your support! We’ll keep blogging through this whole experience (hence the name of the blog) and that will hopefully help us as well as others in similar situations.
Good luck on making the transition work–whatever that transition may be. Time will tell and you two will work it out! 🙂
In our most recent living-apart situation (10 weeks in summer 2011) we kept our finances combined. We actually were making more–N’s summer internship paid much more than his grad stipend, his housing and rental car were paid for, and he had a food allowance. We were fortunate in this aspect, and because we knew all of this was coming, so it didn’t mean too much “uncertainty” budgeting of our time or sanity.
That is nice to know that the the stipend etc. will cover everything, and with such a short time period you probably didn’t have to make many changes at home. Did you end up with just a hunk of savings at the end of the summer to do something with?
Okay, so we’re not as meticulous about tracking these things as you PF bloggers! 🙂 But I’m sure most of it went to paying some outstanding student loans (which were both in deferment at the time, and still are for me), or paying a little more into our Roth IRAs.
Awesome uses.
My husband and I are so codependent that we haven’t lived apart since college (we put in our 4 years apart and are done with that). Basically I took a year off from my new job and did a post-doc so I could live with him while he finished his dissertation. Then he followed me here without a job in hand (though he did get a job offer before the school year started).
Your proposal sounds good.
nicoleandmaggie recently posted..Delaying gratification
That’s so wonderful that you made the transitions work together! Kyle would have considered a short-term postdoc in his advisor’s lab but the funding isn’t available. We looked into him doing a postdoc at That Other School nearby, but he’s in quite a small field so there isn’t a viable PI option there. If we really, really didn’t want to be apart he could certainly find some other job, but we’d rather him advance his career in the best way possible and put up with a year of long-distance. :/ The upside is that there will be huge motivation for me to finish my PhD quickly and there will be little reason to do more than sleep at home! I’ll start looking for a job in the city Kyle lives in before I graduate but I’ll be moving there job or not when my experiments are done!
We were long distance dating, but that doesn’t really count. That said, my father had been an over-the-road truck driver for about 20 years now. Basically, he has to maintain a seperate household, because he is only home an average of 3-4 days per month. He doesn’t have to worry about rent (he lives in his semi), but he does have to pay for showers! How they work their finances is my dad gets an “allowance” with which he pays the cell phone bill and pays his living expenses. The rest of the paycheck is deposited into their joint account for my mother to take care of the house.
There are two main reasons why my dad doesn’t just draw the money from the joint account. 1)Money is razor tight, and it would require too much communication overhead for my dad to always have to check with my mom to see if he could take a shower.
2)They have been using this system for 20 years before the days of direct deposit and debit cards. When they started, my dad got paid via COM-check, which was basically a Western Union for truck drivers.
Edward Antrobus recently posted..Do You Have What It Takes to Be a Paper Boy?
Thanks for telling me about your parents’ system. I definitely get that if things are supertight there should be a differentiation of responsibility so that both parties don’t think it’s OK to go a bit over/spend a bit more.
With refinancing the mortgage and the new job, I’m trying to adjust my budget a bit. For some reason, taking the mortgage payment out makes it seem more worthwhile to lower my budget. I’m now “only” depositing $2,500 into my checking account to cover my monthly non-mortgage spending and I think I should be able to get it down to $2,400 in another couple of months. Now it almost seems like a game to slowly get it down to $2,000/month! The small tweaks in the budget seem to make far more of a difference now.
Leigh recently posted..2013 Investing Plan
That’s interesting that the structural change gave you different motivation to cut your budget! I think it’s a good plan to find a small amount to cut each month.
Wow that’s tough. I’ve been in long distance relationships in the past and it’s really hard (but we weren’t married so maybe that makes it easier, or harder, or both? I’m not even sure). I think if I were in your shoes I’d just keep telling myself that’s it’s a temporary situation and that you’ll be together again in a year or two.
KK @ Student Debt Survivor recently posted..Personal Finance is Personal-Butt Out
Our last stint at long distance wasn’t too bad, but we saw each other twice every five weeks and of course we weren’t accustomed to living together back then. I think this next time will suck more day-to-day but we don’t have the uncertainty about what it will do to our relationship like a dating couple does – we know that we’ll be together again, still married, after about a year. Just like you said we have to keep in mind that it’s only for a little while!
This is not at all PF-related, but one thing we did to stay connected more day-to-day was to read a book together and make plans to discuss certain parts every few weeks. I just realized that maybe collaborating for this blog will provide a similar means of connectivity for you two if you’re living apart!
That is a great suggestion! We have been reading a lot together in the past few months and I would like to keep that up in some way.
Good luck with the transition. My husband and I have lived apart quite a bit, more apart than together actually. 3 of our 4 years of dating and 4.5 years of our close to 6 yrs marriage we lived apart. It is quite challenging. Esp. as you don’t know what is happening in his life as quickly as staying together, we used to fight a lot. He might have been extremely tired that day, but I wouldn’t have a clue. So I might expect him to talk to me longer if I also had a bad day. This caused a lot of friction.
And financially, I see you do have a travel fund, but I wanted to emphasize this again. We would travel during holidays because we could spend more time together (long weekends and all), so the tickets would be more expensive. We also ate out more than we would have done if we were staying together. Those expenses added quickly and quite a bit. Hopefully your school schedule will let you take a day off and travel during non-peak times. Good luck! Does he already have a post doc lined up for fall?
Suba recently posted..Make more money: 9 reasons why you are NOT earning more money
[…] Evolving Personal Finance-Upcoming Transition and A Potential Financial Overhaul […]
[…] from Cash Rebel emphasized saving early and often for retirement in Upcoming Transition and a Potential Financial Overhaul: “It’s awesome that you are able to start saving for retirement in grad school… […]
Good luck Emily! It’s not ideal to be apart, but as 1/2 of a couple in a cross-country relationship, it’s not… horrible. I think it helps if both people are keeping busy, which I’m sure you and Kyle will be! Flights are expensive but I’ve discovered that being able to see my husband once a month or every 6 weeks REALLY helps us cope with the distance. Travel to see each other is worth spending on.
Well Heeled Blog recently posted..Your Longest or Proudest Streak in Personal Finance
Glad to hear you’ve been able to make regular trips! I will probably email you more in detail about your experiences when I get my act together about posting on this subject.
[…] from Student Debt Survivor added Upcoming Transition and A Potential Financial Overhaul to her […]
[…] stages when we will want to devote as much money as we can to some mid-term savings goals and will cut back our retirement contributions to the minimum we consider […]
[…] since Kyle will be graduating in 2013 and increasing his income substantially, we think there is a distinct possibility that we could max out our Roths in 2013 – or save even […]
[…] I think this explains why we have all the hard-earmark type of money present – we know for sure that we’ll need it in the future because of already-scheduled payments. As for the soft-earmark cash that may be repurposed, it’s not fully clear why we have so much in cash when we could have increased our savings rate to our retirement accounts or started saving for some mid-term goals. We will probably shift up a lot of this money when we undergo our financial overhaul once Kyle gets set up in his new city. […]
[…] My graduation might actually follow rather close on the heels of his, so that could mean that we’ll be living apart for less time than we thought. We had originally thought it would be about a year, and it still might be as long as that, but […]