Episode 41: Tim Hesler, Financial Health and Wellness
Tim Hesler, Assistant Treasurer, Global Banking, Cash Management and Treasury Operations, New York University
In this episode of You Matter!, Tim Hesler, a certified treasury professional and assistant treasurer, global banking, cash management and treasury operations for New York University, speaks with Karen about financial health and safety.
Timothy T. Hesler, CTP, is Assistant Treasurer, Global Banking, Cash Management and Treasury Operations for New York University (NYU). He is responsible for global banking, investments, cash management, short term debt, foreign exchange, payment card programs and retirement portfolios. Tim was just recently the President and Chair of the Executive Committee for the Pinnacle Consortium of Higher Education, a reciprocal risk retention captive insurance company in Burlington, VT.
Tim was a Senior Expert in the Corporate Finance Strategy practice at McKinsey and Company focusing on corporate treasury and financial risk before affiliating as a Senior Advisor to the firm the past 7 years. At McKinsey, Tim worked with corporate clients in the US, Latin America and Europe on a variety of Treasury engagements including overall Treasury organization design and transformation, cash management, banking rationalization, FX hedging, and cash flow forecasting. Prior to McKinsey, Tim has substantial experience over 12 years leading finance transformation and corporate treasury advisory engagements across numerous industries for multinational clients as Director, Treasury and Risk, for PricewaterhouseCoopers. Tim provided subject matter knowledge and guidance to client Treasurers and CFOs. Prior to his time in professional services, he also worked in the corporate treasury department for Novartis performing many different functions in treasury and corporate finance.
Intro Voices 0:05
Where do I go? It only happened once. I think I was singled out. The phone calls began about one month ago. What is hazing? Something happened to me when I was younger. I'm worried about my safety. He said he was sorry. Can someone help me? Where can I get help? Can someone help me?
Intro Voices 0:31
This is “You Matter”, a podcast for the NYU community developed by the Department of Public Safety.
Karen Ortman 00:36
Hi, everyone and welcome back to you matter, a podcast created to teach, inspire and motivate members of the NYU community who have been victimized in some form or fashion, and to identify resources both on and off campus that can help. I'm your host Karen Ortman, Associate Vice President of ampus Safety Operations at the Department of Public Safety, and a retired law enforcement professional. Today I welcome Tim Hesler, a certified Treasury professional and Assistant Treasurer, Global Banking, Cash Management and Treasury Operations for New York University. And we're going to talk about financial health and safety. Tim, welcome to You Matter.
Tim Hesler 01:17
Thank you nice to be here.
Karen Ortman 01:20
What is your area of expertise at NYU? What do you do on a day to day basis?
Tim Hesler 01:28
That's a it's a good question, because it is a little bit of a change for me. So after 15 years of management consulting, I joined NYU in 2013. And I work very closely with our finance colleagues on a day to day basis and I'd lead and why use global banking or cash management or short term debt, our global payment cards in our non endowment, investment portfolios, which add up to almost about $2 billion. That includes a working capital fund, and our staff pension and retiree health retirement investment portfolios. I'm also deeply involved in our Pinnacle Captive insurance company, which is owned by 18 universities and believe it or not, is about 40 years of age, so long company not near as old as NYU but day to day, it can be a mixture of investing and cash management dealing with bank issues or just putting out some fires. With our finance colleagues.
Karen Ortman 02:30
That's quite a portfolio my friend. How would you define financial health and safety?
Tim Hesler 02:39
It's I think, for me, I define financial health and safety as a comprehensive portfolio of financial wellness objectives and risk reduction measures. I know that sounds like a mouthful. Financial wellness is a pretty hot topic nowadays.
Karen Ortman 02:57
What des that mean?
Tim Hesler 02:58
Well, it's because you're seeing a lot of students and or employees at companies or big universities that are thinking about financial wellness, maybe this is something we give as a benefit to our employees. Because Americans, we get great medical health, we get great dental health, but you know, your financial health, if you don't take care of it, it can lead to some issues, maybe on your mental health.
Karen Ortman 03:25
So what is it what is an example of poor financial wellness or health?
Tim Hesler 03:32
I would say if we go back, I know Karen, you and I were caught in those huge storms a few weeks ago. That kind of hit New York City and hit New Jersey and hit Westchester and Putnam County really terrible. So a lot of those people who did not have generators, and luckily I had a generator after Superstorm Sandy, well, the hours after the storm they just lined up, they went to Home Depot, they got the credit card out and they tried to get thousand dollar generators and they sold out in 45 minutes. So my question is, you know, did they actually have any emergency savings to get that that generator, t to hook it up, get a get an electrician, buy the gas? That's maybe an example of not being fully prepared for an emergency.
Karen Ortman 04:22
Gotcha. So instead of using savings for the emergency, they're using a credit card to purchase?
Tim Hesler 04:31
You know, it's funny because I've got friends that work and Home Depot and they were just line it up the cards because no one actually has, you know, $1,000 for that generator, let alone the gas cans. Yeah, so that's another $25 $25 there, so that a financial health and safety is meant to protect you and your family from losing your financial security and preventing that loss from derailing the whole long term financial goals because of some unexpected event like a catastrophic illness, or loss of a job, a car bike accident, cyber scam? And look what all the disruptions caused by the pandemic crisis. There's a lot of folks experiencing these personal tragedies.
Karen Ortman 05:17
Sure. When we talk about financial planning, and let's assume we're talking about someone who is new to this idea entirely, how would you suggest that they begin on their path to responsible financial planning?
Tim Hesler 05:34
That's a, that's a big, it's a big question so I will try and, you know, break this down a little bit. Because it's important for the, for the audience of the podcasts that think about how this may apply to you in your 20s, in your 30s, your mid career years and then as you get close to retirement because the objectives for financial health and safety in prudent actions in your daily life will change as you progress through the cycles of life. And I can use this because I'm more in my 50s I'm starting to accumulate wealth for my retirement. For my daughters who are 26 starting their careers, you know, they don't have all those savings and all that so we have different objectives there. So I would probably first say, you know, number one, planning and saving for emergency expenses. And then we kind of touched upon this before
Karen Ortman 06:27
regardless of age.
Tim Hesler 06:29
Yeah, but regardless of age because I think we can see that this is infected everyone in American and one shape, I was in on the, you know, the planet Earth. And we'll use the US as a pretty good example because this hit us hard. So for emergency expenses it's recommended that you save somewhere between three to six months, six months is better. Nowadays 12 months maybe the right number, save for those months of expenses in your emergency fund. Some experts recommend as little as a few hundred dollars to get started with a beginner emergency fund. We just talked about, you know, $1,000 emergencies, some suggest as much as a year or more of income. I think when it comes to emergency savings more is always better. You know, this pandemic, its the worst crisis we've had since the Great Depression and it's certainly not over so those merges savings are absolutely essential. I hope that kind of answers some of that before we move on.
Karen Ortman 07:34
Yeah, sure. That's, that's helpful. Thank you. We can move on.
Tim Hesler 07:37
And in generally, you know, funding emergency with a credit card on that Home Depot example, you know, what are they 17/18% interest? Not a great idea. So you should go through the scenarios of you know, what you can do you know, when something bad happens.
Karen Ortman 07:54
Those what if scenarios, right?
Tim Hesler 07:55
Yeah, it's so so true. I mean, it sounds kind of boring to put it down there but what if you lose your job and you can't pay your rent? What if you have an emergency trip for your family, I just had someone who just had to go for an ER visit for his father. What if your car breaks down? Those pandemic expenses?
Karen Ortman 08:15
I think it makes complete sense.
Tim Hesler 08:17
And I would say, you know, jumpstart your emergency fund, there's seven ways to get great start in doing that, you know, find ways to cut expenses reduce spending.
Karen Ortman 08:28
I'm sorry, you said there's great ways to enhance your emergency funds, or your emergency savings. What are they?
Tim Hesler 08:38
Yeah, the first thing that you do is try and cut expenses, you know, reduce your spend. Because we can always find ways to do it, I mean, Americans like to have a lot of stuff or services. You can take all those savings from those expense cuts, and apply them to your emergency fund. And where might be the best place to put it? Probably like a bank savings account separate from your checking account, because you're checking on your paying bills, so maybe you stash the money in a savings account. And then try and become mostly disconnected from your emergency fund so it's there and you make sure is present. But don't put too much don't over invest in your emergency fund, you know, thousand dollars might be a good number. But make sure if you do deplete some of it that you do get that fund up again.
Karen Ortman 09:32
What recommendations would you have for somebody who's not yet retired, but close to retirement? What would be some financial health and safety tips for that segment of the population?
Tim Hesler 09:51
I would say it might be a good time to start to consolidate some of your banking and financial accounts. I just recently closed, you know, I cancelled one of my banks where I had a savings and checking account I never used. I'm like, why do I have this? I looked at some of my investment accounts, and they rwere at four different firms, and I moved it all the Vanguard. So I think that simplification was important to me. And I've always been a saver, I mean, I'm a frugal kind of guy. But I still practice that. So, my daughter's talk about spending some money, I'm like, you sure you need to spend the money you already have two laptops do you really need a third laptop? Just questioning folks. So hopefully those are a couple ideas.
Karen Ortman 10:40
How does one who is perhaps ineffective in managing a personal budget or maybe they are effective, and there are ways in which they can enhance their current abilities? How does one do this effectively managing a personal budget regardless of your age?
Tim Hesler 11:09
It's a really great question. I mean, I think there's some calculators and things like that out there, I'm sure there's some services, but you can get kind of basic, you can do the tracking the ins, tracking the outs. I know years ago, when I was younger I build a basic spreadsheet. I put all my ins and outs on a piece of paper, you can do that, too, if you don't love to play with Excel, although some Excel is kind of fun. So you're outs, just list your rent, your mortgage, your student loans, car payments, insurance payments, phone bill, food, utilities, etc. And you may find that that list will grow as you think about all the subscriptions you may have that you never use. And then your ins, your ends are, that's probably the easiest. And then once you have your ins and outs, you've got the ability to take a look and say, where can I cut some spending? The tougher thing is to find a way you can make more income right, unless you're jumping from different jobs, or getting a raise, right now, no one's getting any raises in the US so that's pretty tough to do. I think that tracking the ins and outs makes it, you know, more methodical and you may find you're really surprised when you do that.
Karen Ortman 12:24
Yeah. What advice would you offer for those who, when paying their monthly bills, pay the bills earlier in the month just to get them out of the way as opposed to those who wait until the due dates to pay? Is there an advantage to doing it either way?
Tim Hesler 12:49
I think if you need that discipline, that's a great thing to do pay your bills early. But from a from a cash management perspective, I'd like to, I don't like to pay my bill until the actual due date, so I actually went in 20/25 years ago so most of my bills that I pay are auto debited and my bank account. Same thing for my credit card bill on the last possible day. So all that time, you're actually hopefully making money saving money getting interest so far right now and zero percent, you know, interest rates until the bills due, In fact, NYU actually follows that principle because we don't like to pay bills early, we'd like to pay on the due date and extend as much as possible because we've got an investment portfolio backing it up. You want to use our our financial assets, you know, as long as possible.
Karen Ortman 13:48
There are many ways in which we spend money. You spoke of the materialistic nature of our society, our culture here in the United States. Coffee costs a lot of money particularly in New York City. Anything from sunglasses to iPhones, to lunch in New York City can be very expensive. You have Spotify, Netflix, cable, all the other extraneous expenses. When should one know when they need to cut this stuff out? Like at what point should red flags be circling around their being suggesting, maybe we ought to cut some of this out?
Tim Hesler 14:49
Yeah, yeah, they should take a look at their bank account, I've been using my chase app foryears, but I'm not sure if people actually look at their bank account online or look at the statement, I think that would be one indicator. So another indicator is, and to your point, people are just you know, I hear this all the time, I never have any money. I never had any money jeeze we can't seem to save any. We don't have any money. And then they've got the $4 coffee, and they've got the fancy sunglasses that are going to hit, an expensive lunch. They always got the latest, you know, sneakers or iPhone, etc. So, you know, calculate the savings you can get by canceling some of the subscriptions.
Karen Ortman 14:51
Right? should make you feel good. When you see the total.
Tim Hesler 15:42
Yeah, you're doing the unplug and the gym membership and Spotify, Netflix. I'm still getting completely ripped off by my Verizon because I have all the movies, my daughter's given tell me I need to unplug, maybe I will. But I think you have to have that discipline, you feel pretty good about canceling stuff you never use.
Karen Ortman 16:03
Right. You talk about providing financial advice to your daughters. Did you get sound financial advice from your parents? I don't recall growing up, either in my own home or amongst my peers, that financial responsibility did not seem to be a topic of discussion. How about for you?
Tim Hesler 16:31
Yeah, that's a really good point. If when I was 22/23, I just graduated college, I went out and bought my first car, it was a Toyota Celica, I paid 13% interest, you know, on the car loan so, I parents encouraged me to do that. And I gotta tell you, my parents were clueless. My daughter's, you know, I beat up on them, and they're off on their careers, and they finished grad schools, NYU and Columbia, great schools like that, that I'm always putting these what if scenarios on them and making them - luckily, they are investing and they are pretty frugal - but, you know, I would say find those trusted sources for building that budget and how to spend your money. There was an interesting article in the Wall Street Journal, because this is a popular topic, Wall Street Journal is now pushing out like a new series of articles. And the author actually talked about some ritual that she got from an old roommate years ago where she would have the savings for the month, roommates are like, you know, you really need to live your life, so spend half of those savings every month. So years went by nadn she got get married and had kids and all that sort of stuff and she realized that was a terribly bad habit, that ritual. so she cancelled it. Meanwhile, she probably had a lot of nice things but could have been saving.
Karen Ortman 18:00
Tim Hesler 18:03
I was just gonna say one other thing, you know, those $1200 dollar stimulus checks that went out from the government? We really tried to get my daughters to invest the money, instead they went and bought new laptops. They could afford it because they did have savings and emergency savings, but would have been nice if they probably saved and invested. What could go wrong? If they did that?
Karen Ortman 18:25
Exactly. When we talk about credit cards, is it fair to say that using credit cards, using credit is bad? Is there anything positive associated with smart credit card usage?
Tim Hesler 18:44
I love credit cards. I think they're a really great tool for a variety of reasons, which we can get into, I think smart use of credit cards, that includes you know, paying it off in full, not carrying balances, do some shopping around is a really good thing because, believe it or not as they calculate your credit score, and folks are kind of obsessed by the credit score nowadays, a lot of folks in their 20s and 30s, you can get it so easily from your financial institutions, but actually having a little bit of credit and getting more credit, makes your score go up as long as you're paying your bills and not defaulting and all the other stuff. I think it can be good for credit you just don't want to overdo it. And pay those balances in full. If you can't pay the bill in full then you don't have enough savings. You shouldn't be buying stuff if you can't pay that bill off. You know, check the card interest rates. There's actually a whole bunch of websites that you can go and they stack up the credit cards so you can see what's useful for you. Do you want to get cashback? You know right now no one's traveling so why Marriott card is really of no use to me because not going to go anywhere, so I'm trying to use the cashback. My kids are all over the cashback. I love credit cards because I never use cash, I don't use checks. The credit card statement allows me to track when I'm spending. I also like the rewards, I've never carried a balance. I just think it's a great cash management tool to delay payments, you know, 45 days, so I'll actually use an example. So when I bought my generator after Superstorm Sandy, thousand dollars, what was eight years ago. Well, there were no generators with buy actually in America, because they're all they all got bought. So when I was able to buy one I bought in the first day of my new credit card cycle, and then it got the wait for 45 days until they actually paid the credit card bill. NYU actually does that too for our own heart programs, we don't pay them early, we pay them in on the date their due in spread that whole time. Another big thing is that credit card fraud is, what I would say is mostly but partially absorbed by the banks. But you have to check statements online to detect so you do have that protection, should your card get compromised. You don't want to use your card and have theives all pounding away at the bank because thet will turn that card off in like, you know, five minutes, right. But you do have that protection. So set up all those payment and fraud alerts, including real time texts, they'll help you to detect fraud sooner and more accurately versus end of the month. I actually went to a gas station a few years ago, my daughter's is still an undergrad and I went to Walmart three times in the same afternoon. So they flagged that and turned off my card but I didn't have my alerts set up so I had to use my wife's credit card. I could have done a better job with those alerts.
Karen Ortman 21:54
Gotcha. They they've saved me. Well, my account was hacked many times, but the banks were very helpful and it was a pretty swift process. But it's very unfortunate when that happens.
Tim Hesler 22:18
Well, and it's like, maybe I'll segue a little bit, another thing I see is debit card fraud. So you and I see folks still using our debit card quite a bit but if that card is compromised, you don't have that protection, right because thief could just empty your bank account. I kind of relay an interesting story, so there's a quite a famous gentleman named Frank Abagnale, so if you saw the movie Catch Me If You Can starring you know Leo DiCaprio, my daughter's calm Leo, I call him Leonardo, directed by Steven Spielberg. Now I actually had lunch with him because I was introducing him to speak at a conference and he said absolutely fantastic and sincere speaker. I mean, it's an ex criminal. And now he's been working for the FBI for 30 plus years. One of the things I asked him about debit cards, and he said, Oh, he just he just turned off all the debit cards in his family. So I What did I do, I went and we turned off all of our debit cards too. I figured he's an expert and I'll take his advice. I got a little grumblings from the family.
Karen Ortman 23:37
You don't use debit cards at all, you just use credit cards?
Tim Hesler 23:42
Don't use them at all.
Karen Ortman 23:43
Yeah, I might think about that, actually. Talk to me a little bit about managing one's credit score. You talked about the use of credit cards and and how that can enhance your score, which of course everything seems to be tied to your credit score, even like your car insurance.
Tim Hesler 24:10
Yeah, I mean, it's a hot topic, these credit scores. And actually having a little extra credit, and probably having maybe more, I shouldn't say you should have more than one credit card, but actually is some of the it's a formula and they just changed the formula. So having a little extra credit as long as your credit worthy and paying your bills on time, my score actually went up. And there's some big articles in Wall Street Journal about how to do this. And one of the things that, you know, we always pull down those free credit card, from TransUnion, Experian and Equifax so it's really quite interesting to see for me my 25 years of credit history and it's it turned out that a while ago I had all these credit cards I wasn't using, I killed those credit cards, that actually actually hurt me and my credit score. So I did a little research and then I also figured that it's not a necessarily bad thing to have more than one credit card, you can actually go in to Equifax and transit, you can freeze your credit so if if a fraudster criminal is trying to compromise your your credit, that they can't because it's frozen, if you need, let's say, you're going to get a mortgage, you can unfreeze your credit, they can do the you know, the credit check, and then you can freeze it again.
Karen Ortman 25:41
And you can do that through each of the credit reporting agencies?
Tim Hesler 25:44
Oh, yeah, you can do it online. I think one of them you have to do a phone call. But it frankly, is, is fairly easy to do. I mean, they're going to try and sell you this other services you don't necessarily need. Although a credit monitoring service, you know, for $10 bucks a month, it's not a bad idea to give you some peace of mind. I actually have, because some of my accounts have been hacked, you know, when I was I had a instance in my Home Depot car many years ago got hacked so I've been getting a free credit monitoring for me. But, if you feel like you're at risk, you know, $10 a month to pay for peace of mind may not be a bad investment.
Karen Ortman 26:25
Yeah. What do you think about store credit cards?
Tim Hesler 26:32
Good or bad? I think they're, I think they're probably good if you want to get you know, in some sales and find out when Macy's can have a sale and stuff like that. I'm not a huge fan, I used to have some, I cancelled all them. Because it doesn't, I'm not getting the rewards for having one or two core cards and the cashback and Marriott Rewards offer you, they're not bad because you get some mailers, I don't I don't think they're necessarily bad or good. They're also being, their kind of white labeled, so it's probably Citibank or Bank of America or Chase that's behind the scenes. I think you just want to make sure you don't have, you know, a Visa, MasterCard, Amex, and then like a Macy's and Kohl's card, that's probably maybe overdoing it a little bit. How are you going to track all those cards and your spending, and then your spending can get a little bit out of control got too many cards.
Karen Ortman 27:31
Let's turn to the subject of financial safety and the ongoing issue of financial scams and cybersecurity attacks, which there's probably very few who are not hearing about those. How does one best prevent becoming vulnerable to these crimes?
Tim Hesler 27:52
We like to think that, we're nice folks, and we're trusting but I think you'd need to have a dose of skepticism, a lot of this and this is a, you know, they think it's a victimless crime. These are crimes with lots of victims and they prey on the elderly, they pray and all ages whether they're young or old. But having taken off my mother's financial affairs a couple years ago, I merely found a $3,000 fraud on a card and cancelled the cards and her finances were a real mess. It could have been worse, if a smart criminal got in there. So, preventing and identifying financial scams in cybersecurity attacks is something everyone should worry about. You can be lais·sez-faire about but it is probably going to just bite you. NYU works at this all the time in prevention. We have a program at the university, we do awareness training, I do a lot of this myself. We work with internal audit. The things that you're doing at work will also apply to your personal lives. I would say one of the first things you want to do is prevent email compromise - all that phishing, email spoofing, they hit text messages with a link, you shouldn't touch any of that stuff. Don't click on any unknown links. If it's actually really important, they'll call you, they'll get ahold of you at some, means. It's all over the place. Always use multi factor authentication, all my financial accounts, I turned on the extra, you know, I get the text message and things like that. Is it extra work? It is but I'm willing to spend the extra work to make sure I'm protected. Get those tough user IDs secured varied password phrases, you know, unique, not stale passwords. I mean, since I've been doing all the banking and treasury stuff with our team at NYU, I probably have 50 different passwords, I do mess them up occasionally but it's better to have them complicated. Fraudsters are very clever and they're going to get in there. It's just a basic social engineering attacks where you don't necessarily need to have the high tech hacker getting in there. So there was that big news a couple weeks ago about the Twitter hack? That teenager along with two other one, I think he was 18, they actually called the company, they called IT employees, they convince them, they tricked those employees into granting them access to internal tools. So this is an 18 year old going into a high tech Twitter company and they just talked him through it, that happens all the time, unfortunately. So just that basic fraud works with people calling you up and saying, oh, I'm so and so I'm calling from Apple or Verizon and your computer's been compromised. Then as you go through this and they're very persuasive, but then they want your computer password before you know you're locked out of your computer and they're searching through all your emails and going through, you know, your credit card numbers and stuff. So that's basic stuff, super dangerous.
Karen Ortman 31:18
What do you have to say about the investing apps? Good or bad?
Tim Hesler 31:25
I would say I would say not good. And there's a bunch of them out there. In fact, there's a lot of news recently, in the past two or three months in the Wall Street Journal, I mean, you can just google this stuff. But, you know, due diligence on investing apps, it's important to understand those protections and get licensed professionals giving advice. These apps are geared for young investors, they use gaming theory algorithms to make investors not pay attention to risk. And then they take on taking risky moves risky moves, like it's a game and then it increases. Meanwhile, they don't have the assets to back it up and there may be a margin call. So there's been some just terrible news about some of these. I actually don't even see how the SCC can allow some of this. I think they're dangerous and I'd rather just do something more prudent. And if you know, if you think about this pyramid scams, if the return percentage is too good to be true, and Bernie Madoff is a perfect sample, if it's too good to be true, it is, it's a scam. So we basically say he, he stole $65 billion, although I think it was later moved down to $18 billion dollars. So we got caught with that? Rich people got caught with that but it was also a lot of not for profits, and a lot of corporate. The smartest people in the world got burned by that scam so I be very cautious if something sounds too good to be true.
Karen Ortman 32:58
What can you share with our listeners? Regarding responsible investing?
Tim Hesler 33:06
We tend to we kind of think of it is prudent investing, you know, so you must have your savings first we kind of covered that. Get your emergency savings then have some some more savings. Hopefully not at zero percent interest rate but right now there's not a lot of choices. And then you can invest your funds. My daughters, I'm going to use them example, they're going to beat me up afterwards if they listen to this, but...if, you know, they want to invest, I'm like well, invest what you don't have any savings yet and you still you owe some over here and some over there. So make sure you got your savings locked down before you can invest those funds. And Ithen you want to set your investment objectives, your your horizon, your ability to sustain losses, and to what extent...
Karen Ortman 33:56
How does one do that? How does one set their investment objectives?
Tim Hesler 34:01
Well, it's a tough one, like for me, you know, I'm in my 50s so I'm saving for retirement. So, I'm thinking long term because I already have my house and my kids have left that household, I'm mature in my job and career, so I'm investing for the long term but you know, those investment horizons, those objectives may be different for others. If they want to be a first time homebuyer, and this might be a great time to buy real estate in Manhattan, I think we all kind of know then you may want to be saving for that downpayment. So, your investments, you may not want to pick a 30 year investment in a bond fund when you know you need to put 20% down on the house. You may want to keep your investments your objectives short term and not risky, and not get into you know, a commodity fund when you know you're about to have a young baby or something like that. Kind of figure out how you can actually lose, and I don't really have a formula for that, but you should be able to say, you know, how much am I gonna lose, where I just basically stop everything and put a pause in your life. It could be, you know, for rich people it could be, you know, a really high number but for a lot of folks I think it's a low number I would hate to lose, personally, I hate to lose $10. And then you want to think what you might want to invest in, again, we would recommend registered advisors. Is in fixed income, you know, bond funds, where you get a lot of income, and so that might be good. So you don't have a lot of upside, you will have a little downside, but you get income or equities, and equities you'll be taking some additional risk, you can take some of that and decrease it with diversification: you'll get a fund S&P 500, for example is 500 companies. So, if two of them do badly the other 498, hopefully, will do better. but you have to think of it is a long term investment because equities have their ride. If we look at 2020, you know February and March were terrible, terrible months. So there was a huge market plunge but if you did not panic and you stayed in your equity funds, since the bottom of the pandemic, the S&P 500, I think it's gone up 55%. So we can't predict the future but overall you may end up having a pretty decent year because you didn't panic, you thought about investing for a long time and you're willing to go up and down with some upside, that may not be the answer for everybody. If their 60 years of age and they can't take risk, then they should probably be like an annuity product, where it's guaranteed income. But it's basically there's no upside and you're at three or 4%. That could be the right answer for a lot of folks who are worried about the ups and downs of the market.
Karen Ortman 37:09
What's the difference between a 403b and a 401k?
Tim Hesler 37:14
Not much for 403b' are for you know, universities, I think for not for profits, I think that one big difference is that you can invest in annuity where 401k, so if I google and I'm on the 401k plan, I can invest in bond funds and stock funds and probably end up even in individual stocks; which stock picking pretty much doesn't work all the time, even the experts have bad years. Warren Buffett, he's been having a terrible 10 year ride on this. But I think it's basically the same thing and they're tax deferred so as an NYU employee, you're getting an incredibly great benefit because you can actually get 10% of your income, you know, your salary matched by the university. That's is 10%, so that's pretty nice. You can invest the stock funds and bond funds and also annuities, I think that's one of the big differences between 403b and 401k, but also lowers your income, so your taxable amount is less. Always try and max out as much as you can fin the 403b, it's a really great program.
Karen Ortman 38:27
How about debt management? What is considered too much debt? Is there such a thing as good debt?
Tim Hesler 38:35
I think there is some good debt, I mean,if you're able to get a mortgage at a really good rate, and I mean, mortgages are at 30 4050 year lows right now. So if you're going to buy a condo, co op house, and you got that mortgage, you know, let's say you're able to put 20% or 30% down as a down payment. So over 15, 20 or 30 years, you have your mortgage payments but it's only, let's say, at 3%. Meanwhile, you could be investing, doing that prudent investing in a stock fund and bond funds, and maybe making 7%, so 7% vesting is more than the 3% of your mortgage. That's probably some smart debt. The first thing I would do though, I would pay off that high interest rate, high interest rate debt first if you do have it, and I gave you the example of, you know, my car, my first car had a 13% interest rate. That was a bad idea by part, I shouldn't have done it. So I paid that sucker off, you know, really fast. And so I'm in a vacation spot right now and as I walk around in neighborhoods, I see that house has a foreclosure sign, that one's for sale, that one's in pre-foreclosure. So, don't get mortgages and auto loans if you can't pay your monthly payments, because you'll end up in a whole world of hurt. I think it's so important to keep your credit strong. And think about where you could be investing compared to what you're actually using debt. So that could be, you know, it could be a smart move for many people. I certainly did it when I had a mortgage.
Karen Ortman 40:23
What is the best advice you can give college students right now regarding financial wellness and safety?
Tim Hesler 40:34
Hmm...best advice? I'd be really careful of some of those investing apps, read all the disclosures, you know, talk to registered financial professionals, or it could be your parents to plenty of parents give, you know, good advice, watch out for all those, you know, scams, and in fishing, and all the cyber theft. I mean, our NYU students here in New York, luckily, we're in an area where we have a lot of, the world's strongest banks so if you want to open up a bank account in New York City is ideal place to do it. Now, make sure you have that FDIC insurance, when you pick your bank, it's so important. And, I would say don't spend wildly, I mean, you're a college student so you don't have a lot of money. You know, keep your spin to a reasonable extent, you know, look at your look at your card statements or your parents', you know, look at your bank account, and think how you might operate this as a young adult because before you know, you'll be graduating and you'll be getting salary. You don't want to be thrown to the wolves. So, I know that's kind of all over the place but there's a lot of different ways to be smart and prudent. Everyone will make a mistake, I've done it myself, not too many because I'm a frugal guy but just just don't take any big leaps in anything. Use your employee, use your free consultations at TIAA and Vanguard, if you're in a 403 b plan. There's plenty of good advice you can get without paying, you know, maybe not even paying any fees.
Karen Ortman 42:26
Before we go, protecting one's identity from being stolen, what tips do you have?
Tim Hesler 42:36
Certainly never share this, because there's actually, I've seen some of this out in the dark web so yeah, I mean, there's credit card numbers and social security numbers, they're up for sale on the dark web. I think it's $25 for credit card number and stuff like that. So for example, in our day to day life at work, you know, people, because we're in a sharing university environment, they would like to share personal information; don't do an email, just don't do it. Use something that's encrypted, use our tools. If you feel like you're putting out your social security number you're not comfortable, then, you know, find out a way to do that. I had to put some personal identifiable information for myself, for my work at NYU, with with an investment firm working with our downtown office, I wasn't going to put any of that stuff in email. So I made sure there was an encrypted link to do that.
Karen Ortman 43:35
And how does one make that request for an encrypted link?
Tim Hesler 43:43
I mean, if you're dealing with your investment of places, they're going to want you to do that. For example, if you're in if you're with JP Morgan, or Citibank is something that you'll have to go and use a secure messaging within the app or within the website because they're not going to take, you know, just some email. So, you're within that that multi-factor authentication, you're within that password, you're you're within face recognition world so you're in there secure messaging. I think that helps a lot and I know I mentioned before, but if you do feel that you want to protect yourself security number and your identity, and identities are being stolen all the time, it's really scary. Having monitoring service, $8, $10, $12 bucks a month, you can literally put yourself social security number into it and will track it, all your all your credit card numbers, your driver's license number, your passport. I have actually gotten a few flags that so and so site, you know, LinkedIn was compromised, and you may want to change your password. When I get something like that, I'm changing my password on the first day.
Karen Ortman 45:02
Great information. Thank you, Tim. Is there anything that you would like to add that I haven't asked you today?
Tim Hesler 45:14
Folks are inundated with so much information nowadays, I always thought it was a good idea, that should be required in high schoo,l in college, like a mini course on financial wellness or financial health and safety. In lieu of those, I mean, there's some good books and articles. The Wall Street Journal is coming out with a new series on this. You'll find it's actually quite fascinating. I would encourage folks to go out there, it's not like, I'm the only resource out there. There's lots of strong resources that go out there. And even if that one time you saved, $200 that you're going to throw away on something that was maybe not a good idea. that's $200 that you have in your pocket.
Karen Ortman 45:58
Very good. Really great, interesting tips. I really appreciate it. I appreciate your time today.
Tim Hesler 46:06
Well, thanks, Karen, for having me.
Karen Ortman 46:08
Thank you. We'll definitely have to do another episode in the future. I think this is a subject that's not talked about enough and is extremely valuable to our listeners. So thank you to my guest, Tim and to all of our listeners for joining us for today's episode of You Matter. If any information presented today was triggering or disturbing, please feel free to contact the Wellness Exchange at 212-443-9999. Or NYU's Department of Public Safety and their Victim Services Unit at 212-998-2222. Please share like and subscribe to You Matter on Apple podcasts Google Play, Tune In or Spotify