Money Talk with a PhD Student Turned Tech Startup Guy Who Thinks about Money As Much As I Do

Photo Credit: Screenshot from the movie "The Social Network"

Who are you and how old are you?

I am a 27 year old who is currently working as a freelance consultant and CIO of a small tech startup.

Tell me about your background.

I grew up in the South Atlantic region of the US in an upper middle class family. I then went to college on the East Cost, moved abroad to get my PhD (and because my girlfriend/now wife was also living abroad). I am now back in the US, close to where I grew up.

 What does your financial situation look like? If you don’t earn money through a “normal job”, how do you support yourself?

I was lucky/spoiled enough to have my parents pay for my college. That said, I was always raised to be very frugal/financially responsible. As a result I have little/no debt and also work very hard to save money. Since moving back to the US last year, I have been doing freelance consulting. My job is great and in theory pays well, but due to startup cash flow issues, I am currently behind on being paid by more than $30,000. That said, my wife works full time and I do some other odd jobs here and there to make additional cash, so we are more or less breaking even at the end of each moth (not saving much, but  not spending much of our savings either).

How do you define rich?

Having enough money to do whatever you want without worrying about the effect it would have on your finances. For me, this would have to be LOTS of money. I’m not sure there is any amount of money less than $1 billion that would really result in me not worrying about money. It isn’t so much that I want to have heaps of money to buy stuff, I just like to save money. Even if I had a few million in the bank, I would be anxious about wasting money and not saving for a rainy day.

  Did you grow up with money? How did your childhood conditions about money affect how you behave?

I grew up in a household where my parents were never stressed about getting by, but often stressed about not wasting money. My parents are well off, and though neither comes from money, my father has a good job and saves aggressively. That being said, I was taught from a very young age the value of money. At no time in my life did my parents give me money when I asked for it. Up until high school I had an allowance ($1-$12/week as I grew up) and even as a little kid I was encouraged to work for money. I never held an official job, even in high school, but from maybe 5th grade on I did odd jobs for cash - babysitting, mowing lawns, shoveling snow, computer work etc. Long story short, I attribute all of my attitudes about money to my parents, and mostly to my dad since he is the most outspoken on the subject.

Did your parents give you money when you were growing up? What about for school?

They never gave me cash. On occasion they would lend me money with no interest, but it was never like, "I want to see a movie, can I have $10?" That said, they did pay for my college tuition and gave me enough cash to buy food. Going out and buying other stuff was my responsibility and I often did jobs off Craigslist for cash.

  Do you still have school loans?

No, my only debt is a 0% loan on my car that I chose instead of paying cash because when you consider inflation/the cost of money, it was basically free cash.

 Where did you learn about investing?

I learned some from my dad and have picked up a bit more here and there from others.

 What does your family situation look like?

I am married and money was definitely one of the more difficult parts of merging our lives. We both work but up until we got married, we kept our finances quite separate. Now that we are married, things are a bit different.

 Do you and your spouse/partner have similar financial habits?

Yes and no. My wife is very fiscally responsible, but without the baggage. It doesn’t stress her out to spend money the way it does me. At the same time, I tend to be more likely to buy material items. My thought has always been that if I can get a good deal on a product (good enough that I could in-theory resell it for close to the purchase price) it is worth getting it. On the other hand I spend as little as possible on consumables like clothing, going out etc.

  How are you teaching your kids about money?

My wife and I don't have kids but I hope to teach them the way I was taught by making it clear that money is important and has a time-value to it. I think it is valuable to think about money in terms of how long it takes you to recuperate it.

  Do you feel like you are living paycheck to paycheck? If so, do you feel that way due to your lifestyle?

Yes and no. In an ideal world, I would be saving 40-60% of my income. Because I am behind on getting paid, we are basically spending what we make each month but with a sizable cushion of savings in case things change. Once I get my back pay, we will be upping our savings significantly.

 What was your most regrettable purchase?

The car I bought when I moved overseas for my PhD. I was unfamiliar with the market and didn’t sufficiently consider the long term prospects of the car.

  What was your best purchase?

Don’t get me started! I have bought tons of stuff on Craigslist that I have sold for more than I paid which always makes me happy, but the best deal I ever got was on my current car. I paid about 22% less than MSRP on a brand new car and then got a 0% loan to finance it.

Do you feel like you have a financial habit that’s out of the norm (or at least something that others have commented on)?

I stress far to much about it. It physically pains me to get a bad deal or to waste money. If I realize I paid even a dollar more than I should have for something, it eats me up inside. It is totally crazy and not healthy.

I also have a bit of a reputation for being a cheap skate, and I have mixed feelings about this. I like being cheap and have no problem with that, but I also feel I don’t skimp where it counts. I buy people nice gifts. I take good care of myself, my family, and my friends, and I certainly live a comfortable enough life.

 Do you feel like your success now has anything to do with luck or being in the right place at the right time?

Only so far as being born into the family I was. Not paying for college is an amazingly lucky thing to help start me off on the right foot. Even if I had paid out of my own pocket, I think growing up with the financial outlook and work ethic I was taught with would still have given me a solid edge to be financially successful.

 How much investing do you do, if any?

Some. I have played around with social lending (LendingClub) with moderately positive results. I also have a Roth IRA and HSA that are partially invested.

 Do you actively contribute to a retirement account of any sort?

Roth IRA. It is amazing! Everyone who has an extra $5k each year should be maxing out their contribution.

 Do you feel like your lifestyle reflects your income bracket?

Not at all. Most people I know with a similar (or even significantly lower) household income live (at least outwardly) fancier lives. My wife and I share a car, and while we did buy it new, it is very basic. I love it and it is the nicest car I have ever owned, but I could have bought it outright with a few months salary.

Have you ever jumped income brackets (either going from low to high or vice versa) and how did your lifestyle change?

Yes, while living overseas and working on my PhD, I was making the equivalent of $16,000 USD per year. About 6 months later, I was on track to make about $80,000 USD (this was pre - cashflow troubles with the startup, but that will hopefully pass soon anyways). I am making much more now but would say I am just as cheap as I was before. I budget down to the dollar for as many of my expenses as I can, and try to save as much as possible.

 Do you talk to your peers and family about money?

Yes, probably much more than they would like. I hardly if ever talk about the quantitative specifics of my finances (probably because they would realize I am being ridiculous) but I often stress about money to my wife/friends/parents. To me, if I am not saving money, it is a bad thing and I feel anxious about it.

  Do you worry about money?

Yes, if I have less money at the end of the end of the month than at the start, I feel anxious about it. I don’t like spending money unnecessarily and when I am forced to or do so accidentally, it can really ruin my day.

  Do you splurge on anything? If so, what was the last splurge and how much was it?

Yes and no. As much as I stress about money, I love to shop for and occasionally buy electronics or other sort of luxury items I don’t really need. At the same time, I have some behavioral tricks I use to fit this in with my anxiety about saving. Basically, I allocate about $50 per month in my budget to spend on myself. I'll buy clothing, electronics, entertainment, whatever. I work hard to stick to this amount, but if I make any extra cash during the month, I allow myself to add that to this category. For example, I walk a neighbor’s dog for $12 and usually make between $100 and $200 a month doing these odd jobs. I add this to my ‘discretionary fund’ and buy unnecessary stuff with it. This month I bought a guitar for $150.

 Do you have a plan to make more money?

I am hoping to grow my role at my startup and am currently gaining equity in said company. Hopefully thing go well here and I start earning more every year in addition to having the potential to make a lot when/if we get bought out. This is only if things go as planned (and who knows if they will). Ideally I could be making $200,000-$300,000 every year and still working only half days.

  What would it take for you to feel like you are completely rich?

I don’t think I will ever feel rich. But in the next 15 years, I hope to buy/pay off a house and start saving money to be able to provide for my potential future children in the same way I was provided for.

 In terms of money, what was something you did in the past that you could do differently?

Budgets are a double edged sward. My budget works well and helps me to track my spending, but it also acts as a great tool to help me justify my purchases. I sometimes think that if I used a different strategy I could spend even less. That said, this budget does help with the stress side of things, so perhaps it is worth it.

What is your strategy for moving forward now in regards to your big goals in life?

I am more-or-less happy with the status quo. If things don’t improve with my startup cash flow I will likely seek out additional employment.