Cybersecurity tips to protect yourself online

S1: It’s time for Midday Edition on Kpbs. Today’s show is about money , how to protect it online , and the best ways to grow it. I’m Jade Hindman. Here’s to conversations that keep you informed , inspired , and make you think. Nearly 1 in 3 people report being a victim of financial fraud or cybercrime. An ethical hacker joins us to talk about ways of staying ahead of the game.

S2: So one of the most important things is basic cyber hygiene , right. So we want to make sure we’re doing things like using a password manager. So it allows us to use different passwords for different sites.

S1: Plus everything you need to know about protecting your data. And April is Financial Literacy month. We’ll have tips on what to do with your money that’s ahead on Midday Edition. Welcome in San Diego , it’s Jade Hindman. You know , 1 in 3 people report being a victim of cybercrime and financial fraud , while an ethical hacker joins us to talk about how to stay ahead of the game and protect your information. Plus , April is financial literacy month. We’ll have advice on what to do with your money. This is Midday Edition. Connecting our communities through conversation. We rely on technology for much of our lives , handing over a lot of our personal information in the process. But massive data leaks have become so common. A recent example of that the tens and millions of AT&T customers , both past and present , who had their personal information leaked online. So what can we do to better protect our data , especially our financial information ? Well , we’ve got the help of an ethical hacker here with us today. Nicholas Beyer is professor of cybersecurity at the University of San Diego. And he’s always a step ahead of the latest hack. Nicholas , welcome to Midday Edition.

S2: Thanks for having.

S1: Me , Nicholas.

S2: Right. So we want to make sure we’re doing things like using a password manager. So it allows us to use different passwords for different sites. So we don’t want to be using the same password on multiple sites. We also want to make sure we’re turning on multi-factor authentication so that if somebody does get our password , they still need another step or another piece of information to access our accounts. So you never want to have the same password on multiple websites , because if website A gets hacked , then they can use that password to try to log in to other sites on your behalf. And if you are using the same password on multiple websites , then they’re going to be able to get access. The two step verification is going to add an extra layer. And then there’s multiple forms. So it can be in the form of a text message. It can be in the form of a hardware key. Or it can be an app on your phone that has numbers that changes. Or it could be a push notification that arrives to your phone. So making sure that you at least have those two things in place are pretty important. If unfortunately you do fall victim to a scam , it’s important to freeze your credit ahead of time. So probably a good step for folks to take if they’re not planning on getting a loan or opening any new financial accounts , because then if folks get access or if attackers get access to your sensitive information , they can go out and use that information to open financial accounts. So if you freeze your credit , it’s going to make that a lot harder , if not impossible.

S1:

S2: It depends. So if you have the ability to monitor whether or not a password has been compromised. So if it’s been in a leak , then you should only change your password when you are notified that that particular password has been compromised. If you don’t have , uh , the ability to do that , then the best practice is to change it every 90 days. Uh , but if you have a password manager and you’re using randomly generated passwords , it’s very unlikely that that password is going to get compromised. If it does , you’ll probably get an alert and then it’ll tell you to go ahead and change it. A lot of different services like Google , Apple , Microsoft and all the other password managers , if you save any passwords within that system and it identifies it as compromise , it will let you know , hey , your password for website A has been compromised. You should go and change it.

S1: How concerned should we be about leaks ? You know , I might get a notification that there was a data leak on LinkedIn , for example , and you feel like , uh , they just think , you know , they only got my name , you know , and password. So you change the password , but then you find out that there was also a data leak over here at this other website and another website.

S2: Right. So maybe the payment card information in a particular , uh , organization is separate from the rest of the network , which is actually required by the payment card industry data security standards. Um , but if we have multiple pieces of information from multiple leaks , they can put all those pieces of information together and then go ahead and try to do things on your behalf , like open an account or call family members to try to , uh , you know , get them to send money. There’s a whole bunch of things that they can do , especially once they start putting all those different pieces together.

S1: Are they able to use AI technology to to assist in that ? Yep.

S2: Uh , you know , I , we can do a lot of stuff with that. Now. So if they have , you know , a database , they could put a very large one. They could potentially feed it to AI and say , hey , find me all the people with this name that live in this place. And that’s a relatively easy task for for it to do. Wow.

S3: Wow.

S1: Well , earlier you mentioned two factor authentication. Can you explain what that means and how people can set that up in case there are some folks who don’t know ? Sure.

S2: So multi-factor authentication or two step verification is an extra layer of security that you can add to your account. So normally we’re going to have a single factor. And that’s something that we know. So that’s going to be our password. But with multi-factor authentication we’re going to add a second factor. So it can either be something that you have or it can be uh , you know , something that you are. So for example , let’s say we want to log in to Google. They give us the ability to set up several different types of tokens that we have. So it can be an app on our phone , or it can be a hardware token that plugs into your USB port. So like that , if somebody gets access to your password , which is something that you know , they would still need to have access to that second factor , which is something that you have or something that you are like your face or your fingerprints. Hmm.

S1:

S2: Another important one , especially with some recent breaches at telecommunications providers that we’ve seen , uh , is to try not to use your cell phone for multi-factor authentication. So text message based multifactor authentication , because going back to your earlier point , uh , when folks have their information leaked in different , uh , breaches , then that information can be , you know , stitched together in order to do something so they could potentially call your cell phone provider and say , hey , you know , and I , you know , my name is Niko , and I want to , uh , get a new SIM card , and then they’ll use the information that they’ve gathered from the various leaks , and they’ll go ahead and they’ll try to do that. And then if they are successful , then they can reroute text messages that are meant for two factor authentication to a device that they control. Wow.

S3: Wow. Okay.

S1: Nothing’s safe. Yeah.

S2: Yeah. It’s definitely important to have what’s called a layered approach. So you never want to rely on , uh , you know , one thing. So you never want to just say , okay , I have a randomly generated password and multi-factor authentication. No one’s going to be able to get access to my information. Right. But it’s always important to have multiple controls. So we want to have , you know , passwords. We want to have multi-factor authentication. Uh , we want to have be running some sort of security software on our computer. We want to make sure that our computers and phones are staying up to date. So all of those things combined are going to be what’s really going to help. If you’re only doing a few things and you’re not , you know , keeping your systems up to date , using password managers , using multi-factor authentication and staying aware of the new threats , then you’re more likely to fall victim to one of these attacks , unfortunately.

S1: All right , well , that in mind , I want to talk about how to make that process easier of protecting your information because keeping up with multiple passwords , that’s a I can’t keep up with the car keys. Okay. Passwords that is that’s a whole nother ballgame. And in addition to that , what I’ve noticed is a lot of these companies , whether it’s , you know , your iPhone or Google , they’ll say , hey , it’s time for an update. Oh , you need to buy more storage in order to do it though.

S2: So one of the things that you can do there is , for example , how many podcasts episodes do you have downloaded on your phone , right. Make sure that you’re clearing out all your podcasting episodes , any videos that you’ve already watched , or any TV episodes that have been downloaded. Make sure those are off the phone. Once , uh , you’re no longer watching them. That’s going to help free up , uh , free up space. But as you also mentioned , we can turn on auto update and then it’s going to update itself , for example , while we were asleep. Right. If we , uh , the phone’s going to learn , you know , our behavior because it’s always with us , always on us. And then it’s going to decide the most optimal time to update itself. The computers are doing the same thing now. They have auto update. So you can turn that on. And then it’s going to install the update on its own , uh , while you’re not using the system. And then to your point about remembering multiple passwords , uh , so the password manager is that it actually makes that a lot easier because you. You only have to remember one password , which is called your master password , and then inside of your vault , which is where all your passwords are stored. You can have really long and complicated passwords , so your bank password can be 64 randomly generated characters , including upper lower number , and special character. But you only have to remember the master password. Hmm.

S3: Hmm. Okay. All right.

S1: Well , I’ll trust that the big tech story over the last year or more has been artificial intelligence.

S2: Um , before , we used to be able to tell , hey , you know , this is probably a phishing email because they had bad English or they were , you know , making a grammar mistake , or they were using a word that’s not commonly used that is no longer an issue for them because of AI. So they can go in and they can feed an outline of a message that they want to write to an AI model , and it will clean it up and spit out something that sounds like it , you know , came from a legitimate source. Uh , they can also use it to help improve the quality of the pages that they are standing up for folks to put their credentials in so they can steal them. Uh , and they’re also using it to develop malware. Right. So I can be used to help people program. And the attackers are doing that , just like the good guys are doing that. They’re using the AI to help them program better malware.

S1: One more recent trend in fraud technology we’ve heard about is AI voice cloning. Can you explain what that is and how that works ? Yeah.

S2: So that’s basically when somebody gets a clip of your voice off social media or records you , and then they will go ahead and create a clip of audio that sounds almost exactly like you , and then they will go ahead and make it say something , uh , you know , like they will call one of your family members with that and say , hey , I’m stranded and wherever , and I need , you know , $5,000 or whatever it is to get home. Uh , and a lot of the times people will fall for that because it sounds exactly like the person that they’re impersonating. So one of the things we can do about that , um , something that I’ve done with my friends and family is I’ll agree on a code word , you know , out of band. So in person , in an area that’s not being recorded. So just as an example , uh , we can use the word Aztec. Right ? So if you call me and you say , hey , you know , I’m stranded , uh , triple A is not coming , and , you know , I need $2,000 or whatever to tow my car to the nearest gas station. Uh , the person on the other end of the line , you know , if they’re skeptical , then they can pose the question of , okay , well , you know , what’s the code word or what’s the password that we’ve agreed on out of band ? Uh , and then if they , you know , if they say the right , the right word. So if they’d say Aztec , then you know that it’s actually them. But if they say , I don’t know what you’re talking about , or if they say something besides the code word , then you know that something is up.

S1:

S2: I’ve had people reach out to me saying , hey , um , you know , my family member just got scammed. Somebody called them up impersonating me , and they said it sounded exactly like me. What can I do ? Right. And so it’s like , well , stop posting videos of yourself , uh , you know , online. So you and I , you know , I or , you know. Past the point of no return. Uh , but for other folks. Um , you know , be careful what you’re sharing online. Uh , you know , be careful what you’re posting on social media , because people can grab that and they can use it to create , uh , a voice clone and then call your family members and , you know , convince them that it’s you and then extort them out of some money.

S1:

S2: What concerns me more about the , um , deepfakes is the election that’s coming up. So , you know , somebody can go out and make a message of Biden or Trump or , you know , somebody , some other political figure , and they can make it say something that they’ve never said or something really inflammatory and that could , you know , for example , cause outrage. And , you know , then we have protests and we don’t know. Right , because you can use that technology to create a deepfake , right ? A fake video of somebody saying something that they didn’t say , or a fake image of somebody doing something that they weren’t doing. So that’s something that really concerns me this election cycle , especially since we know that our adversaries are trying very hard to spread disinformation this election cycle.

S1: Coming up cybersecurity tips even when you’re away from your computer.

S2: So I never use my debit card. Ever. Just because if you use your debit card and somebody gets that , then they can immediately drain your account.

S1: You’re listening to Kpbs Midday Edition. You’re listening to Kpbs Midday Edition. I’m Jade Hindman. I’m speaking with cybersecurity expert Nicholas Beyer about how people should protect their financial information online. Okay.

S2: So you want to make sure that you have a unique password for every website , ideally using a password manager. You also want to make sure that you’re using multi-factor authentication on your financial accounts. Ideally not text message based , but a lot of banks don’t offer non text message based multifactor authentication. And then you also want to make sure that your systems are up to date. In case you know , you accidentally download something that could exploit a vulnerability that hasn’t been patched. And you also want to make sure that you’re running security software on your system to try to catch any malicious files that you download , and also keeping your systems up to date. And that includes phones and computers and tablets.

S1: I’ve always kind of been curious too , because , you know , in some places your banking information can be stolen through swiping your card , say , at a gas station or at the store.

S3: Pay ? Yeah.

S1:

S3:

S2: Because whenever you use that technology , it’s actually going to tokenize your card number. So when you’re paying , it’s not your actual card number that’s going to get presented to the terminal. Uh , and it’s also a lot harder to intercept that NFC signal. Whereas with what you were referring to earlier is called the skimmer , where they put a device on top of the card reader. And then anytime somebody swipes their card , it will store that information or transmit that information to something nearby. So Google Pay , Apple Pay , Samsung Pay , those are going to be a lot better to use than just , you know , regular swiping your credit card.

S1:

S2: Just because if you use your debit card and somebody gets that , then they can immediately drain your account , right ? Because it’s literally hooked up to your checking account. So I try not to use my debit card ever. I use my credit card and then just pay it because the credit card , if something happens , you can call the bank and they can , you know , charge it back so it won’t be as devastating as if your bank account gets drained. And then you have expenses that are coming up. It could take the bank a few days to put that money back. So that’s why I recommend that people don’t use their debit cards unless absolutely necessary.

S1: I know , know someone who recently found out their bank account was drained and that someone just walked right into the bank branch , use their pin and cleaned it out. Yep.

S3: Yep.

S1:

S2: So one , you can pay for something online and then the database can be leaked or the payment processor that there that that particular website is using can be hacked. Um , and then the second way is through hardware skimmer. So it’s pretty common at gas stations. So they’ll attach a device to a terminal. And then once you pay with your card it’ll intercept the details on the card. And then they can use that information to create a fake copy of your card. And then go and use that to drain the account. Wow.

S1: Wow. There’s so many mechanisms for attack out there.

S2: Um , no text message , multi-factor authentication because it could be intercepted. Uh , also making sure to use a password manager. So all my passwords are different. So there must be at least 500 different entries in my password manager. Um , and then also making sure that my systems are up to date and keeping on top of the vulnerabilities that are coming out. So if there’s a big vulnerability , for example , in iOS or in windows , uh , you know , there are services that will alert , alert you. So , for example , the Department of Homeland Security has the Cybersecurity and Infrastructure Security Agency , and they send out a vulnerability bulletin every week. And so making sure that my systems are patched. Right. But it could be really straightforward for less tech savvy people if they just turn on auto update.

S1:

S2: You know , I have my email that I’ve had forever. That’s something really silly. And then I have my , uh , professional email that I use for , you know , professional correspondence. And then I have my email that , you know , I don’t really care about it. I’ll just give it whenever somebody asks for my email. And that’s kind of like my , my junk drawer of emails , if you will.

S1: And then quickly , we touched on deep fakes. Um , also another vulnerability I think is probably , uh , our country’s infrastructure. There have been so many hacks. Where do you think we stand on that ? Are we at.

S3:

S2: A few last month or the month before , we saw , uh , you know , the director array of the FBI and , uh , John Easterly , the head of Cisa , they testified in front of Congress and they , you know , mentioned that the Chinese were already in our infrastructure. And anytime they could just press a button and then , you know , things could go the wrong way. But , you know , on the other hand , we have the same thing , right ? So we’re already in our adversaries infrastructure. And they know that and we know that. So it’s kind of like a mutually assured destruction. But our infrastructure definitely has a lot of work to be done on it. The problem with that is a lot of these systems are really , really old because when you buy , for example , a power plant , right ? Or when you build it , you don’t trade it in every three years. It’s , you know , last 30 , 40. Sometimes longer years. And so the systems that are running those big heavy machines and , and processes inside of the plant , they can’t really replace those very often. Right. And , uh , you know , you can’t really take a reactor or some sort of , uh , heavy industry facility offline for very long because then it’s going to have an impact , you know , on the surrounding areas. For example , what would happen if we take a water treatment plant offline or what would happen if we , uh , you know , take a really important power plant offline. So it’s really difficult for that sector. Um , they have a lot of unique challenges , right ? They got a lot of old systems. They have to be on all the time. And the systems are really , really expensive. Right. So when you’re buying a , you know , a nuclear reactor , the systems that control that nuclear reactor , you cannot buy those at , at Best Buy , right ? Yeah.

S3:

S1: So good grief. So , uh , water treatment plants , you know , electric grids , all of that could be hacked.

S2: But there’s no such thing as a completely secure system , right ? There’s always going to be a way in some sort of vulnerability that hasn’t been discovered yet. And that’s why it’s important to have a layered approach. Right ? So you never want to rely on one particular safeguard. You want to have multiple safeguards in place.

S1: So it’s just cutting a hole in my mattress. The safest bet.

S2: Uh , it’s possible , you know , if you have good security , you know , at your house , if you’ve got a good , uh , good secure perimeter , then , uh , you know , it’s not a bad place. But if your house burns down and all your money’s under your mattress , there’s no.

S3:

S2:

S1: So now I’m trying to figure out which is more likely house burning down or data breach.

S2: Well , we are in California. So.

S3: So.

S1: Yes , this is true. Point taken. All right. Nicholas Beyer is a professor of cybersecurity at the University of San Diego. Nicholas , thank you so much for joining us and imparting your knowledge.

S3: Thanks for having me.

S1: Still to come. April is Financial Literacy Month. Up next will have advice on what to do with your money.

S4: Oftentimes , people don’t know what they actually spend. And when they’re dealing with debt and they’re dealing with being able to pay that debt off , they need to understand how much they can afford.

S1: You’re listening to Kpbs Midday Edition. You’re listening to Kpbs Midday Edition. I’m Jade Hindman. You know , it’s no secret that San Diego is an expensive place to live. Home prices are high , rents are high. The price of energy. Well , that’s high too. So what does that mean for our budgets and saving for our future ? With April being Financial Literacy Month , we wanted to talk more about personal finance and how we can better understand the complexities and the stress that can come from managing our money. Midday edition producer Andrew Brackin spoke with John McKean , a certified planner with Comprehensive Advisor , along with Paul Lim , board member of the San Diego Financial Literacy Center. Andrew began by asking Paul to explain more about what financial literacy is to me.

S5: Financial literacy entails understanding the rules of money in America , such that you aren’t going to make any seriously egregious errors as a result of not understanding some of the concepts related to tax planning or time value of money , which I think is a bit of a non-obvious lesson , and that can go so far in terms of helping you with your own financial situation. Ultimately , it will come down to your own efforts and your own activities over time. That ultimately drives your success.

S6: And in your work with the San Diego Financial Literacy Center.

S5: You know , a lot of people out there , I believe , are monetizing complexity in that they wish to make the system a little bit more complicated than it has to be , so that they can serve as informational gatekeepers and serve their own purpose , really , to get paid to solve a problem that they are almost a part of or that they created in the first place. So it’s a lot of demystifying a lot of the rules and regulations , and then the various moving parts that are inherent with our increasingly complex American financial system.

S6: And you mentioned there , you know , egregious errors a little bit earlier. Can you give a couple examples of those ? Yes.

S5: You know , I’ve met some people who are unable to calculate some of what annual percentage rate really means when they might be borrowing money , and they’ll go into some loan looking only at whether or not they can afford the payment without looking , maybe at the larger picture and really calculating the cost of those things over time. The American dream has often been about owning your own home and things of that nature , and about how good of an investment it is. But this aspect needs to be paired with the fact that the US government basically threw trillions of dollars at that asset class over the last 40 , 50 years , however long you want to measure it. So when you take that aspect into account and then also adjust those increased figures for inflation , it really begins to illustrate a different picture when you take those factors into account.

S6: And I want to dig more into some of what you talked about there. You know , Apr inflation , those kind of terms. But John I want to bring you in here. You feel that keeping a budget is an important first step for people to get a handle on their financial situation.

S4: Um , and when they’re dealing with debt and they’re dealing with being able to pay that debt off , they need to understand how much they can afford. They also need to be able to plan for their living expenses to make sure that the income that they do make is going to be sufficient in order to be able to pay those expenses down. So living within your means , planning for big expenses , understanding how to save for the future and save for emergencies. Those are all really important things. And that starts with creating a budget. There are a lot of times where we can use technology to our advantage , such as apps that you can put on your phone or budgeting software , and there’s many different types into it quick in a lot of these different types of accounting systems really help people plan and budget correctly.

S6: Paul , how about you ? I mean , I think , you know , you don’t use the word budgeting.

S5: And when you’re looking at sort of the field of persuasion and about messaging and ensuring that whatever you wish for the client to implement within their lives is going to be executed. I do kind of like to utilize some different terms , whether it can be more about , um , being conscious of spending or something else of that nature. Just for some reason , the B word hits people the wrong way , because it gives you an idea of scarcity and depriving yourself of various items. I instead try and reframe the conversation a lot of times into ways that you can earn more. You can almost earn your way out of any problem , and then it paints a picture and a feeling of abundance so that you don’t feel as though you’re depriving yourself of things that you want. And there’s only so much that you can really cut in a particular month. There’s virtually no limitation to how much you can earn , as long as you’re willing to put in some additional time and really work to make yourselves better over time in whatever it is that you do. And it doesn’t necessarily have to be that you take on a second job or something else. You can look for ways to monetize your hobby. And as John was saying , there are a number of different technologies that are out here. That are giving people the opportunity to explore avenues that were simply not available to us many years ago.

S6: So , John , going back to , you know , staying on this budget track. I mean , what does a basic budget need to have in it ? Just someone , you know , pad and paper , like , what do I need to do to get , um , yeah. To write down to , to , uh , you know , get something out of my own budget.

S4: Well , when I look at how clients of mine spend their their income , I look at two different things. One is what is considered discretionary and then what is considered necessary. Um , and living expenses are obviously going to be a necessary expense. Being able to pay your mortgage down , be able to pay your rent , that kind of thing. Um , food and gas , those are necessary expenses. So it’s important for us to know how much we spend on average. So that way we can determine whether or not we have enough coming in to be able to pay those expenses down. And then we need to identify what’s discretionary. What do we do for fun ? What are some of the things that we don’t necessarily have to do , but we want to do it or we like to do because it’s it’s a way of life. And so we need to identify the two different types of expenses. Those are really important things to be able to identify and to determine. Well , if , if I need to pay down debt , for instance , how am I going to be able to do that ? And is there something that I can maybe cut back on , or is there something that we need to just budget for correctly , um , because being able to pay for , uh , pay down debt and making sure that we’re saving for emergencies and making sure that we’re putting money away to be able to grow our wealth , those are all important things. And it starts with understanding how much we can afford to spend.

S6: And on the subject of living expenses , you know , with our high cost of living here in San Diego , one of the most common questions I think we hear from people is how can you approach financing and saving when you’re just simply living paycheck to paycheck ? What advice do you both have for people who may not have extra income at the end of a month and are just struggling to get by ? Paul , start with you.

S5: Sometimes when we describe these circumstances , we try to empower the client by getting them to see their household as a business. And even though they may not own companies , everybody is in business. Whether they know it or not , their product or service could be their time. It could be their expertise , it could be their labor or effort. And when you’re looking at a company that doesn’t have a significant profit margin , you ask yourself , you know , would you invest in your own company if you saw the numbers look like this ? Instead , you give them an empowered role , more like the CFO of their own household , and you get them to embody that role and to look at ways for them to grow their bottom line , effectively taking it just as seriously as any business. And when you can get them to view things in those terms , well , now they’ll start to approach it with less of a personal aspect and more like this is strictly about business and discretionary income in John’s example , could be a great way for you to analogize that to the profit of a company. Nobody goes into business just to break even. And so why should you treat your own household any different for for those reasons , we kind of look at this as a very serious thing and not something that we cynically say , well , life is just too expensive these days and I’ll never be financially successful. You have to get them to really view themselves in an elevated position so that they’ll take that on more seriously with enthusiasm. John.

S6: John.

S4: I think one of the ways , especially when budgeting and debt and all these different types of things become overwhelming to the to the common consumer.

S6: I’m Andrew Bracken. Today we’re talking about money and budgeting with financial advisors John McKean and Paul Lim.

S4: But sometimes they find themselves to to to have too much debt , and they get themselves into a spot where they can’t pay that debt down. And so oftentimes I’m finding that they’re , they’re , they’re taking too much debt on , on , on their higher , higher interest bearing credit cards. I also find that they focus in on , on social media and , and seen , um , some , some sources on social media giving them investment advice where it might not necessarily be prudent advice. So making sure that they’re getting solid advice from a reputable source , making sure that they’re working with someone who is considered a , uh , a fiduciary , a financial advisor , or even a certified financial planner. All of these people have different disciplines , and it’s important to make sure that you’re working with the right professional in order to get the right education.

S6: So , you know , you mentioned debt there. And we hear a lot about debt , good debt , bad debt , credit card debt.

S4: And when one thing happened and what I mean by that is if you get too much debt and it has too much of a of a too high of an interest rate , they can get them get to a point where they can afford to pay that debt debt down fast enough , and they find that they’re putting way too much money into bad debt. I consider bad debt , uh , an interest bearing account that , um , that has a higher interest rate than what you could expect to get inside an investment account. And so when you’re looking at , uh , credit cards that are oftentimes higher than 30% , for instance , four out of ten credit cards have an interest rate higher than 30%. And that’s just it’s just obnoxious to be able to to , uh , assume that you can carry a substantial amount of debt with an interest rate that high , whereas , um , we have just gone through a low interest rate environment. And so most people have refinanced their houses , and so they’re sitting with interest rates at twos and threes that I would consider a good , uh , a good debt source , because you could you could likely invest your money and earn something around 6 or 7% and still get ahead.

S6: Paul , you earlier mentioned , you know , April , things like that.

S5: You pretend like assets and debts are time machines for money. Basically , a debt is you operating a time machine , bringing money from the future to today. And the cost of running the time machine is the Apr that you pay on it , whereas savings is the opposite. You sending money to the future. Your reward is the rate of return that you’re getting on that particular investment. These are the concepts that you utilize when talking about time value of money. Because when you start to view things from this lens , you actually can characterize some debt as good or bad. So for example , if you are able to borrow money from the bank at less than the rate of real inflation , which , by the way , I will tell you , just as an aside , that the number that is often reported in the newspaper for inflation doesn’t include the prices of food and energy , thus making it a bit useless to most people. But if you are able to take money from the future at a lower interest rate , then the rate at which the currency is being debased. I mean , you’re almost stealing money from the bank. Now , the whole idea behind it is that you would want to utilize those dollars in order to earn a yield in excess of the cost of that time machine , plus the taxes. You’re going to have to pay the rate of return that you do receive. And in that case , it’s actually a very good deal. You’re actually being very clever about it. It wouldn’t be correct to characterize all debt as being bad necessarily , otherwise you wouldn’t be able to buy a house till you’re 60 years old. So you look at these various factors all together. What is the rate of return I can achieve ? What is the rate of return I need to achieve in order to perform in excess of a particular debt ? In John’s example , when we have a 30% credit card , you need to buy an investment that would compound at like 45% just to break even , because you’re going to need to pay a great deal just in taxes to cover the appreciation on it. So with these lessons in mind , you can begin to see these various elements at play and understand whether a particular deal is expensive or suboptimal , let’s say.

S6: And John , on this , you mentioned , you know , having an interest rate higher than 30%.

S4: So maybe somebody has a credit where they’re a credit card , where they’re trying to reduce the amount of interest that they’re spending. And so sometimes you might find an introductory rate that’s below 10% , uh , when rates are really low , you might even be able to find that at 0% for a certain period of time , um , before it increases. But , uh , I can probably say that probably an average of 14 to 16% is is probably typical for a , for a normal credit card where you’re not in default.

S6: Paul , you talked about debt being borrowing from your future self and savings being the opposite , giving to your future self.

S5: I mean , we’ll talk about , uh , stocks and bonds , and sometimes some clients will view some of that as like gambling , for example. And I kind of give a reframe whereby we try to emphasize the importance of passive income , residual income. You see , many people can only make money by trading hours for dollars. But if you own a piece of a publicly traded company , you are an owner of that company. And if those employees make your ownership stake that much more valuable over time , I mean , you’ve effectively made money in your sleep because you got all the benefits of owning a company without having to run the company. And so you’re able to show them that it’s not about trying to annex your money with a moonshot. It’s a way for you to say , hey , let’s take a portion of my dollars , make them actually do work for me so that I can passively make money by owning a company without having to run it. That’s an example of a reframe that we can utilize sometimes when speaking about various financial concepts.

S6: And John Quigley and the time we have left.

S4: Now , granted , we want to make sure that we are being tax efficient as we as we invest. So making sure that we we pay attention to the type of account that we’re investing in could be equally as important as the amount that you contribute. So understanding your tax situation , understanding how much you can afford to put into these various accounts is important. But I think staying disciplined is is even more important. So that way you have consistency. Um , consistent contributions to investment accounts allow you to dollar cost average along the way. It allows you to overcome some of the barriers that investors have , such as timing the market. I think that’s a common theme for people that don’t have a lot of experience. They want to find a great entry point into the market , whereas if you’re making consistent contributions to your accounts , your dollar cost averaging along the the spectrum of how the market moves , whether it goes down or goes up , you’re making constant contributions at , say , 10 to 15% of whatever your income is.

S1: That was financial advisor John McKean with Comprehensive advisor , along with Paul Lim of the San Diego Financial Literacy Center , speaking with Midday Edition producer Andrew Bracken. That’s our show for today. Don’t forget to watch Evening Edition tonight at five for in-depth reporting on San Diego issues. We’ll be back here tomorrow at noon. If you ever miss a show , you can find the Midday Edition podcast on all platforms. I’m Jade Hindman. Thanks for listening.