Exploring the financial intricacies of pursuing an MBA, John Byrne, Maria Wich-Vila, and Caroline Diarte Edwards bring in personal finance expert Daniel Heisinger, a Chicago Booth alumnus and BCG consultant, to demystify the budgeting essentials for prospective students. Business school comes with a hefty price tag, leading many graduates to navigate significant debt post-graduation. Daniel shares his expertise, having led the Personal Finance Club at both Accenture and BCG, and offers valuable insights into handling the financial realities of an MBA.

A key takeaway from the discussion is the importance of assessing the worth of an MBA. Daniel emphasizes that building a personalized financial model to estimate break-even points and payoff periods is crucial for admitted students. While acknowledging the high costs, he firmly believes the degree is worthwhile, both financially and non-financially. His approach encourages applicants to consider the broader benefits of an MBA, such as networking opportunities and personal growth, aspects that don’t always have immediate financial returns.

The episode also highlights the invaluable intangible benefits that an MBA offers. Daniel reflects on the lifelong friendships and expansive network he gained through Booth, emphasizing their role in his perception of the degree’s value. These connections often provide support, insights into new career possibilities, and a sense of community that enriches the MBA experience beyond the classroom. For MBA aspirants, this conversation illustrates the multi-faceted value of investing in a business education, urging a comprehensive evaluation beyond just the financial implications.

Episode Transcript

Note: This transcript was generated by AI and may contain minor inaccuracies.

[00:00:06] – John

Well, hello, everyone. This is John Berner with Poets and Quants. Welcome to business Casual, our weekly podcast with my co-host, Maria Wigfila and Caroline Diarte Edwards. Today, we have a guest, a Chicago Booth MBA, who works over at BCG, but he knows a lot about personal finance. Everyone who looks at a business school website and takes a glance at the price tag on an MBA degree, well, we want to make sure you don’t faint. It’s a very expensive degree, and it doesn’t even include the opportunity cost of leaving your job and not having income for two years, which is why so many MBA graduates leave school with a fairly good-sized debt. In fact, the latest figures on median MBA student debt at Wharton, which is the top one, 161,000. At Dartmouth Tuck, 146,000, Cornell, 145, Kellogg, 145, and it goes on from there. If you look at the top 77 schools, the debt roughly averages around 60,000 in terms of what people are leaving with. Daniel Heisinger has been really looking at personal finance for quite some time. He started the Personal Finance Club at Accenture when he worked there before going to Booth, and he has started another one at BCG.

[00:01:32] – John

Daniel, welcome.

[00:01:34] – Daniel

Thanks. It’s great to be here. And finally, excited to be a part of the Poets and Clowns community. I’ve been a reader for a long time. I never got spotlighted, so I’m glad I get to talk to you now.

[00:01:44] – John

Well, we’re lucky to have your expertise. I mean, one of the things that you’ve done is actually conducted workshops for Chicago Booth students, or Ned Mitz in personal finance. What are some of the things that people should be thinking about before they actually on campus after they hit the I accept button?

[00:02:04] – Daniel

Yes, I think after that first champagne or nice dinner celebration, very quickly the reality sets in. I think like those figures that you mentioned, people Google and find the same things and start getting a little overwhelmed about what is it going to take to do this program? And I think the main question I hear a lot, especially from admitted students, is, is it worth it? And they’re trying to help get a sense from people of what the payback will be. Obviously, some of it’s nonfinancial, as we all know. But they do want to put the numbers on paper and build a model and figure out what is my break-even point in my payoff period? And so that’s actually one of the first things we I’m going to talk about in my workshop, it’s different ways to reason through that calculation. Obviously, I don’t know the answer for everybody, but giving people some of the tools to put that together for themselves.

[00:02:55] – John

Having been through that calculation for yourself and for many others, would would you say that the degree is worth it? You’re speaking to three unabashed advocates for the MBA degree.

[00:03:07] – Daniel

Definitely. I would say part of the reason I keep doing this presentation is because I do think it’s worth it, both financially, and especially not financially, just as someone who recognizes that even though I love personal finance, the world does not revolve around money. There’s many things in life. I have a few kids that cannot be valued in financial terms. And the world is pretty bad at valuing things like friendships and family and time to relax, even if that means you’re not optimizing your income in every possible way. So we do talk about that a little bit, too, on our workshops. But I think for me, financially, I look at the calculations I made back in 2020, when COVID had just started. There was a lot of uncertainty, and I put together this model and break-even point, and felt like, roughly, I would break even with my current career within roughly four or five years, meaning I’d take out a lot of loans, but I’d also get a higher salary. And so even excluding all those nonfinancial benefits, I am, what, two and a half years out now. I think I’m actually closer to breaking even.

[00:04:14] – Daniel

I think it’ll be more like three, three and a half years. Then I have many, many years left in my life. It feels like for me, it was totally worth it just based on the decisions I made and how recruiting went for me.

[00:04:28] – John

I imagine the friendships you made and the network you joined through Booth, if you were to put a value on that, you probably broke even already.

[00:04:38] – Daniel

Yeah, I think the day I graduated, for sure, I think I look at my text right now on my phone, and it’s friends from business school sharing articles, having debates, seeing each other’s job updates, getting the intel on what it’s like to work in career acts that I just didn’t even know existed four or five years ago. And now I have friends who, when I’m in a new city, I can visit them, hear about what it’s really like. And all of that, I think, is just a huge benefit. Also, I was able to help people who are having kids for the first time in business school or right afterwards, and showing them it is possible to be successful and to have children. And so I feel like that give and benefit on the relationship side was a huge opportunity that just people undervalue in a lot of ways when they’re building their financial model for MBA.

[00:05:30] – John

I bet you a lot of things that people leave out is the fact that you get a summer internship that pays a certain amount of money. You probably will get, in many cases, discounted tuition through a scholarship or fellowship. You may be able to even work part-time while you go to school and do a gig in their income. The other thing is you don’t really forego income over two full years because no MBA program lasts two exact full years. Right? Right. Those are calculations you need to put in through your spreadsheet. Caroline, I imagine you deal with a lot of people who worry about this.

[00:06:06] – Speaker

For sure, yeah. It does put people off applying sometimes, which I think is really a shame. It is intimidating to look at the level of fees, often for young people who have never been in debt before, it’s a huge amount of debt to take on. You’re really betting on your future, and people can feel a lot of uncertainty about that. And as Daniel says, I think it’s important to take into account not just the financial benefits, which for the vast majority of MBA graduates are very attractive, but also the intangibles. Daniel, I’m curious about what you think about the job market, the fluctuations in the job market, because there have been a flurry of articles recently, which we’ve talked about on this podcast, about journalists suddenly noticing, Oh, the placement rates for graduates of the class of 2024 went down compared to 2023. So is this the end of the MBA? And of course, the job market is always cyclical. So there will always be cycles, and there will be classes which graduate into really strong job markets, where the job offers are raining down on students. And there are classes who will graduate into into recessionary markets, and it will be much harder for them, and it may take them longer to find a position.

[00:07:32] – Speaker

So how do you think about that and how do you advise candidates to factor that into their decisions? And if they are concerned right now, for example, that the US may be heading into recession, right? So how do you advise candidates to think about that and the risk that they’re taking on given potential fluctuations in the job market?

[00:07:51] – Daniel

Yeah, it’s something I hear a lot right now, and it is a new thing. It was not something I heard a lot two years ago. I guess the heavy disclaimer is obviously, I’m guessing, I don’t know. I don’t speak for my firm or any intel on what my firm is doing hiring-wise. But I think one thing that is important to remember is when I was going in fall 2020, There was a ton of uncertainty, and everyone was saying, Why would you get an MBA in the middle of COVID? The economy is about to end. There’s not going to be a world anymore. What a waste of money. I mean, there was all this uncertainty. People were dropping out of programs. Schools were wondering what was going to happen. And it ended up being a fantastic time to be in business school. It was one of the best times, I think, for me to be recruiting in 2020, 2021. Then everyone saw that and was really excited. And suddenly now we’re in a little bit more time of uncertainty. And soI think my general advice here for this and for personal finance is to not follow the crowd.

[00:08:51] – Daniel

When everyone thinks something, usually they’re about to be wrong. And so, again, we never know what might happen. But I think, like you said, it it didn’t stop you from applying. Take that first step, see what your options are. You might be surprised how much in scholarships you might get. I was amazed how much in scholarships I got, and I could have easily talked myself out of it before I even got to that stage. And so I think, go through the application, get the recommendation letters, get counseling, get your essays together, and you see what happens. And then you put all your cards on the table, and you look, and you run the model, you talk to your family and friends, and then you It’s really a judgment call. Maybe if you’re making a really good salary now, you’re on the line, you think it’s not worth it. But I saw people make huge career changes that just would not have been possible otherwise. Talking about you were a teacher, and now you’re an investment banker, or You’re a veteran, and now you’re a consultant. Some of that does not happen without the MBA. I think for some people, they’d really have to wait, what’s their alternative, and get a sense for how much risk they’re willing to take.

[00:09:59] – Caroline

It’s It’s been a while since I had to take out and subsequently pay off my student loans for business school. But I seem to recall that, for example, the amount of time that you were given, the total amount of time, if you wanted it, was pretty generous. It was up to, I think, 20 years or more. Then I also seem to recall sometimes, and I don’t know if this was a school-specific thing, but there were occasions for things like, I don’t know about loan forgiveness per se, but let’s say somebody decided to get a job in the social enterprise sector. I think that there may have been ways to negotiate with the student loan providers to work through those repayment schedules. Do you happen to have the latest info on what are the current terms? When people get nervous, for example, or sometimes when I work with people who are trying to decide, do I go to the higher ranked school which gave me less scholarship, or do I go to the perhaps less elite school that gave me more scholarship, and I say, Well, that delta, it looks like a big number right now, $50,000, $100,000, whatever right now.

[00:11:00] – Caroline

However, you will get a lot of time to pay that off. Do you happen to, and I don’t want to put you on this, but do you happen to know what are the latest terms that student loan providers are offering? Because in particular, people are nervous right now that the economy, that the current downturn will last beyond the next two years, and they’ll be graduating into a downturn. Can we give them any solace or comfort?

[00:11:27] – Daniel

I think I would say, in general, the conventional wisdom is that federal loans have more income-based and forgiveness plans. Typically, private lenders don’t really mess around with this stuff. It doesn’t mean none do, but the federal programs are pretty standard and clear. The caveat being I have no idea in the next three and a half years based on what’s happened so far, what the status of those programs will be. So again, it’s helpful for people to not bank on the Department of Education working the way it has for the last few decades. So I think that’s the caveat. I think on the social impact side, though, too, I’d always encourage people. Like many schools have programs to give you extra funding or scholarships if you want to go into those fields because they recognize your trade offs very different. And so make sure they know that. And often those are extra applications after you get in. Those are things to look at. I think the other thing people forget a lot is basically everyone refinances their loans as soon as they graduate because you don’t get great terms when you’re going into school. It seems silly, but the reality is you’re relatively risky.

[00:12:32] – Daniel

You’re not going to have income for two years on paper. I think it’s an oversight by many of these companies, because the reality is very quickly, you will have high income, and you’re going to be responsible about paying them back. But for about two years, you have pretty high rates, and they’re a little bit scared. And then once you graduate, everyone refinances, finds a much better rate. And at that point, you can decide. You have a job offer or you don’t. Do you want to do 20 years or five years? I did a five year plan because I got a really low rate, and I knew I would be able to make the payments. But if I didn’t have a job offer when I graduated, I would have definitely stretched out the refinancing, right? A little bit. So I think it’s important for people to remember, the first thing you have to do is start applying for school. But remember, it will get better over time. I think the other thing, the thing I’m a big advocate for, too, is I’ll do one one referral push, is I do think there’s a startup called Juneau that has made this process much easier.

[00:13:31] – Daniel

So you used to have to apply to a bunch of different companies, get your credit check 17 times, and get all these different rate quotes. I think Juneau realized it was started, I believe, by some HBS alums. But basically, they negotiate as a block with all the MBA students, with all the student loan companies, and they get the best rate for all of us. And then it’s a super easy website. It’s like a five minute application. You knock it out. And if you find, if you want, you can do applications anywhere else. If you find a better rate, not only will they match it, but they give you cash back, too. And so that was just something I found all my classmates use this because it was just much easier. And you’re trying to plan all this stuff for the MBA. It just makes it a lot easier to navigate through that process. So I think things like that have helped. There’s a lot of people who are creating startups to make this process easier, to roll over your 401(k) from your old employer to an IRA. There’s a company now that does that for free called Capitalize.

[00:14:26] – Daniel

There’s cool entrepreneurship ideas from MBA I’m seeing who went through this and are like, It could be better. We’re a market that is more, I think, financially savvy and responsible than people realize. And on paper, it’s not as risky as many of these other graduate programs where you might come out and have no job or job making less than what many pre-MBA candidates make today.

[00:14:52] – John

How do you know how much money to borrow? In other words, if you have personal savings, should you tap into them or not? Then in value, Emanuating the actual cost of the degree. Is it something you should front load? In other words, borrow as much money as you possibly can right up front? Or do you borrow your first year and then you go back and you borrow your second year because many times, there’s going to be that ski trip to Switzerland, that student emersion in India, or unexpected expenses that accrue because MBAs like to travel and they like to network.

[00:15:30] – Daniel

Yeah. Yeah, I think that’s one of the first things we do in my workshop. And so I guess my other referral push will be, if anyone listening to this wants to go through the whole workshop, let me know. I have a website we can maybe share afterwards and happy to talk through it with people. But we actually have a model I built where you plug in all those things. Like you said, people forget internship income a lot. They forget sometimes that they might have a partner who’s going to have income and will help pay their rent or something. And so things like that all plug into there. And then it spits out a number, basically, over the two years, how much do you need to borrow? And it includes some amount in there for travel. And we talk about what’s the right amount for people. I did not travel much because I had little kids, and it was COVID. But we did a survey of a bunch of Booth and Kellogg students and found the average is $10,000 a year in travel expenses. Now, again, that means some people are doing more, some people are doing less.

[00:16:26] – Daniel

And I always encourage people, figure out where you think you’ll be on that spectrum. But you want to make sure, right, when those trips come up, you’re not scrambling to go and borrow a little bit more because you can during the year, but it’s a pain. So I encourage people, especially the first year, to borrow a little more than they think, and then they can always adjust the second year, but you don’t want to have to be in this tough position while you’re figuring out what your expenses look like. I think, of course, there’s the financial traditional question, which is you look at the interest rate you’re going to get to, and you try to guess if you have a bunch of savings, what could you in your investments. The risk there being if we do have a recession and you’ve held on to your investments thinking you’re going to use them to pay for school a second year or something, and suddenly a recession, you won’t want to sell things. And so you just have to be somewhat cautious about when you make decisions like that. But I think that’s where it also brings into play taxes.

[00:17:21] – Daniel

Like one thing we talk about a lot in the session is if you’re going to sell investments, the best time to do it, assuming the market is stable, is during your middle year, where your only income is your internship income because you’re in a lower tax bracket than either before or after your MBA. And so you can actually limit thousands of dollars of capital gains taxes by selling your investments in that middle gap here. But again, it’s some amount of risk of not knowing where the market is going to go. And so there’s always the emotional part of this, too. You can only model so much. At some point, you have to make a judgment call of what number are you comfortable borrowing? How long are you comfortable waiting for the market to maybe good or bad things. We talk about those trade offs, but ultimately, I am happily not a financial advisor, and so I can’t tell anyone what they should do, but I do tell them the things that they should weigh before they make the decision.

[00:18:13] – John

Now, Daniel, what do you think of the estimates that business schools produce on their websites for the cost of a degree, and I mean, beyond tuition and fees, schools have an estimate for living expenses and the total expense of the degree. I often feel that they’re very concerned and probably 20% below what you need. Am I right?

[00:18:34] – Daniel

I’d say yes, just because the travel, like you said, is not even on there. I just pulled up the cost of attendance from Booth that I use in my presentations. There’s transportation, $1,800, but that doesn’t include flights to Columbia or whatever. I think people really don’t think about the fun things that they will not want to miss out on, and they need to allow for those. Health insurance also, I mean, people forget about this, but if you, like me, had kids who didn’t have health insurance otherwise, it was roughly when I went a few years ago, 5,000 per person. So that was 20 grand a year in extra expenses. And I might look at this cost of attendance and say, oh, 7,000 health insurance sounds great. But you forget that that’s just for you. If there are other people you’re providing for this, this balloons very quickly. And I’m looking at the housing and food amount here. We had a two bedroom apartment in Chicago. There’s no way for a year of housing and food, we spent 26K. It was a lot more than that. So it helps, I think, to take these with a grain of salt and then do your own research, either online or I found, talk to current first year, second year students.

[00:19:50] – Daniel

They will have great intel on what the average rent is that you can expect and things like that that maybe you’re left out of here.

[00:19:58] – John

Yeah, those booth estimates don’t include dinner at Fabio Viviani’s Siena Tavern in Chicago. And if you have an affinity for Italian food, you want to be there at least once a month, okay?

[00:20:11] – Daniel

That’s great.

[00:20:14] – John

Caroline, your thoughts on all this?

[00:20:17] – Speaker

Yeah. So I’m also curious, Daniel, if you have any advice for international candidates. I work a lot with people who are applying from all around the world. Myself, when I went to business school, I I was working in France, so I took out a loan in euros. And then when I graduated, I was working in Indonesia and earning dollars. And that currency translation didn’t work in my favor. So some candidates are also, of course, dealing with currency risks. When they’re applying to business schools. So do you have any suggestions or advice for international candidates in particular?

[00:20:53] – Daniel

Yeah, we often have a lot of international students on my booth webinars, and then dive into this a little bit. I And I think the one thing that is apparent very quickly for international students is that getting loans is harder, right? You can’t do federal loans from the US government. And in many cases, the private loans are inaccessible to you, too, from some companies. I would say, Juneau, the one I spoke about, I think, is doing a good job expanding this to students from a number of countries. But again, it all depends on the loan providers. They’re the intermediary between the providers, and so they’re They’re trying to persuade providers to say, Hey, just because someone’s not from the US, doesn’t mean they won’t pay their loans back. They’re still going to get the same great job offers. But it takes time, I think, for us to persuade people. And so I always caution international students that you can expect to pay potentially higher rates. I mean, all schools, I think, have some recommended providers. But if you look, even when I was going with rates of 3, 4%, I mean, the international student rates were more like 10 %.

[00:22:01] – Daniel

And it’s just, unfortunately, it’s a system that I don’t control. I would love to make it easier and offer 3 % loans to students from other countries. But I think that’s just something in their model they need to account for. And then we also talk a little bit about how important it is to start building a US financial credit history. And so getting a credit card where you don’t need a Social Security number, you won’t get as good benefits as US students, of But the point is just to start using it for something regularly paying off the balance, building up your credit score. Because if you do choose to stay in the US, you’ll need that to be able to buy a house and car and all this stuff. And then I think as time goes on, you get these questions more like, I’m thinking more about the club at my firm, about how much do I put in my retirement plan? If I’m going to go back to my other country, what’s the challenges with taxation? And it really depends on the country, and it gets really complicated. But we do like expat specific events with internationals at my firm in our personal finance club.

[00:23:05] – Daniel

I’d say they’re some of the most well-attended events. We bring in financial planners with specific expertise in the international dynamics. And it’s still is complicated because it all depends on your country’s treaty with the US, which I’m sure also will change in the next few years. But we try to help make this stuff a community versus everyone’s got to figure it out on themselves. You just have no idea who’s trying to take advantage of you and who’s giving you good advice.

[00:23:33] – John

Daniel, I want to come back to a point that Maria made, because this is something that a lot of applicants deal with. You get accepted into multiple programs. The higher-rank programs tend to give you little to no money. The schools that aren’t ranked as high often throw money at you to get you to accept. Of course, this is going to be an individual’s choice, and it could be based on how much scholarship aid one school is offering over another. But how do you make that decision? Is Maria right that $50,000 today really isn’t worth it? Because if you look at the lifetime median cash pay for an MBA, it’s over 4 million. But if you look at a top 10 MBA, it’s over 8 million. What does that tell you about the school that wants to give you a $50,000 discount on the tuition?

[00:24:31] – Daniel

Yeah, it’s a hard question. It’s something I’ve talked to a lot of people about and have seen people choose either option, which gives me some confidence that for different people, the answer can be different. It depends how much of a family cushion you might have if things don’t work out? Because for someone, 50,000 might be a fine risk to take for maybe the extra four million. For someone else, if they don’t have anything to fall back on, it could be really really scary. So I think what’s helpful, I’ll not name school names, but at least when I was deciding between schools, I obviously chose Booth. I got into a similar tier school as Booth that gave me much less money, but instantly matched Booth’s offer when I told them what I got from Booth. And so it’s a good reminder. If you don’t ask, the answer is always no. Once you’ve gotten in, if you say, Hey, I got this other scholarship. Could I get more scholarship like I got from here? And I would love to go to the school. They’re not going to say, Oh, never mind. You don’t get in anymore. The worst they say is, No, we can’t.

[00:25:33] – Daniel

Then at least, you didn’t lose anything.

[00:25:36] – John

Yeah, but Daniel, wait a minute now. You got another school to match the Booth offer, then you turned them down? Is that what you just said?

[00:25:44] – Daniel

Yeah, that’s correct. I won’t name it. I was trying to make a clear, honest decision, and ultimately, it was not just the money, clearly. But I also had a full ride from a top 10 school that was not, I would say, the boost here, but it was a top 10 school. And so I had to make this decision, essentially. It was probably roughly 50K for me. It’s a good example, Maria. Of 50K for me of going to Booth, versus another top 10 school, again, would have been really good. Now, part of that for me was a personal component. I wanted to be in Chicago, and so that was worth some amount of that 50K. But I also just… I mean, there was something about the Booth visit for me that really connected with me. And I know people have this at every school, and there’s some amount of nonfinancial aspect that I felt like this is a place I’m going to flourish, and the place that I feel values the academic experience And I wanted to take hard classes from famous Nobel Prize winning professors. So for me, that was a bonus and worth, again, some amount of that 50K.

[00:26:54] – Daniel

And so I think ultimately it felt less like 50K and more like maybe a 20K, I don’t know, decision when I weighed the financial impact of those other factors. And so I’d encourage people to do some analysis like that. But then ultimately, I think you make a call outside of the top 10, as you said, like recruiting is very different for some of the top firms. And so it is really important if you are looking at going to some of those top firms and want X salary target, it will very likely be better to pay a little more and go to the better school. But if you’re planning to go somewhere that doesn’t really care about the school’s ranking, or if you’re sponsored by your company, and that covers some amount of the tuition, or if you want to do the nonprofit social impact thing, too, and it’s a lot less important, then the money savings might be a lot more meaningful. So I think what you plan to do afterwards is a huge part of that decision, too. And I think the risk that people stop thinking about, too, and I think the big thing that surprised me is as soon as you set foot on campus, people ask what you’re recruiting for.

[00:28:05] – Daniel

You have to already before you get in, think about what that decision will be. That informs also where you want to go to school.

[00:28:12] – John

Right. Now, Maria, I wonder, looking back on your Harvard MBA experience, is there something you wish you had known beforehand regarding personal finances that you found out later on?

[00:28:24] – Caroline

I think the biggest one is something we already covered, which is that it’s not just the price of the school and the dorms. It’s that, Oh, my gosh, there’s a spring break trip to Brazil and Argentina. That sounds amazing. There’s different trips. There’s different… Even just socializing, going to clubs or bars. Things like that that you don’t really think about when you’re initially budgeting, and then they really do start to creep up on you. I absolutely agree with Daniel that you have to have a big cushion, and you also definitely have to take those cost of living estimates at the Take those with a huge grain of salt. They were too low 20 years ago. It sounds like they’re still way too low. I don’t know if they’re assuming that you’re going to split a one bedroom apartment with 15 other people and just eat ramen. But some of those estimates are really a bit ridiculous. Just whatever that cost of living is, I like the idea of take out a little bit more. Don’t take out a loan for the minimum amount that you think you’ll need. Take out a little bit more for a cushion.

[00:29:27] – Caroline

Worst case, you don’t use it, you pay it back or you put it into a CD. I don’t know. Daniel is a personal finance expert. He knows the best use of that excess. But if you’ve got the excess funds, I often tell my son, It’s better to have something and not need it than need it and not have it. I’d rather that you take out a little bit of extra student loan, and then if those opportunities do come up, even if they are social. I think sometimes when I talk to people who are more concerned about the expense, they’ll say, Well, I’m not going to be the one who goes on that trip to Columbia. But once you show up to school, you realize Daniel also spoke earlier about the non-financial benefits that you get from business school and the friendships that you make, and just some of these lifelong friendships that you generate through things like going on a trip to Columbia with some of your classmates. The ROI on that may not be financial, but it is definitely high and definitely strong. I definitely think that folks realize it will cost more, but it might be the value is actually more than you expect it to be.

[00:30:32] – Caroline

So net net, it all balances out in a positive way.

[00:30:35] – John

So, Jan, one surprise, perhaps for me about this whole topic is people who are going to a business school for graduate education, I would assume that they know the basics of personal finance. You’re telling me, Oh, no, they really don’t because you’re not taught that.

[00:30:52] – Daniel

Yeah, I think you would assume wrong. I think working at some of these top consulting firms, too, I think you’d be amazed just how much people don’t know about some of this stuff. And part of it is because we have a very complicated system. I think for the internationals, especially, I totally get how when you show up to the US and have to figure out 401(k) and IRA and federal and private loans, and all this fixed and variable, it’s insane. But even people who grew up here, I think we have intentionally made it pretty, well, or unintentionally made it, pretty convoluted in there are a lot of, I think, companies and, quote, advisors out there who act like they can help you and actually make it worse for you. And so a big part of what I do is it’s trying to just honestly build confidence for people at my firm, and for Booth classmates to say, you can actually do this on your own. It’s easier than you think, but there’s some principles you need to think about, and you need to build your own confidence that you are capable of doing this. Like Like you said, these are students getting into top MBA programs.

[00:32:02] – Daniel

They are capable of using my budget model and thinking through what they can spend every month. Yes, it maybe isn’t fun, but it is much better than the alternative, which is not doing anything and just floating through, realizing you burn through your cash and then really struggling afterwards. I think half or something of students we surveyed said they were stressed about money during their MBA. So my goal is to make that a lot fewer so that they actually feel like they are on top of it, and That starts with planning as soon as you get in.

[00:32:32] – John

Yeah, that’s a terrific goal because I guess the number one lesson here is you need to be conscious about the decisions that you make that affect you financially. Obviously, an MBA is a significant investment. I’ve always said that getting an MBA is the second highest sum you’ll ever pay for anything other than owning a home. Of course, I’m not talking about raising children because that’s a whole other thing. But it’s a big purchase, and it needs to be made with a lot of forethought and planning, as you point out. Too many people may just wander in and out not spending enough time Putting pen to paper and figuring out, Okay, how much is this really going to cost me and how am I going to finance it in the best possible way? Before we got on, you mentioned something that I think is really smart. Your savings interest rate is more than double your interest rate on your loans, so you’re not all that anxious to pay it off. Now, there’s some other people who just can’t stand having debt over their head, and they may need to pay it off. But Obviously, if you can arbitrage interest rates, the higher savings rate than you have on your loan, keep the loan for goodness sake, because you’re paying less than the cost of inflation on it.

[00:33:56] – Daniel

Yeah, well, exactly. I think that principle goal that I learned from doing that with my student loans carries through to my post MBA life, too. We just bought our first house, our interest rate is six and a half %, which my parents keep reminding me is terrible compared to what they pay. But we also just bought a new minivan, and we’re able to finance it at 1. 9 %. And so I also look at that and I say, it is better for me to pay that minivan as long as possible and use the money I saved to pay down my house faster. And so that principle that I started having to think through for my loans, it carries forward as well. And it’s uncomfortable at first, because you really have to battle some emotional desire to not have debt, which is a good thing. But think long term, too, about Hey, I ultimately am trying to optimize my financial future and support my family. And one way to do that is paying the things that cost the most interest first and letting the other things ride on for a while. So that’s where I’m at.

[00:35:00] – Daniel

But I think as everyone’s in a different situation, this is part of what makes these discussions fun and why we do these events so often at my firm.

[00:35:08] – John

Exactly. As you well know, the middle class LBO is a mortgage You get the appreciation on the entire house, not the amount of money you put down for it. You’re essentially getting appreciation on what you borrowed, which is really… It’s a poor man’s LBO.

[00:35:30] – Daniel

I like that. I had not heard that yet, but that’s good.

[00:35:35] – John

All right, Daniel. Hey, thank you so much for joining us today. And how can people find you?

[00:35:41] – Daniel

Yeah, I do have a website, literally just My name Danielheisinger. Com. And so if people want to ask questions or like I said, if they want to request one of these presentations, workshops, I’m happy to talk through how we set one of these up. There’s a little contact form there. So if you it out. It goes right to my email, and I usually reply very fast. So I would love anyone who listens and wants to dive in more and get in touch, feel free.

[00:36:09] – John

So spell your last name for the folks so they don’t have to look it up.

[00:36:13] – Daniel

Yes, that’s great. So Danielheisinger. Com, D-A-N-I-E-L-H-U-I-Z, as in zebra, I-N-G-A. Com.

[00:36:26] – John

All right, there you have it. So if you need some advice, you to do this in a really smart, prudent way, check out the site. Do the model. Be conscious of what you’re doing. Daniel recommends Juneau as a good place to go to look at loan rates and possibilities. Borrow more than you might think you need because you do want to go to the Siena Tavern if you’re in Chicago. Believe me. For all of you out there, good luck on your MBA journey. This is John Byrne with Potts & Quats.