Textbooks are worth their weight in gold

Forget the stock market, internet, and whatever you might think is worth investing in. The good old college textbook beats them all. That boring first semester hard cover and similar books have risen over 1,000 percent in price since 1977. Textbooks are a big business. Estimates for the total value of the textbook industry range from $7 to $9 billion. And just a handful of companies sell them. The five largest publishers are: Pearson Education, McGraw-Hill Education, Scholastic, Cengage Learning and Houghton Mifflin Harcourt. They have been around a long time, carry deep pockets and usually acquire any start-ups or smaller competitors in quick order. Sone analysts compare them to drug companies because they have similar economics. In the pharmaceutical sales model, for example, drugs are marketed to the decision makers—doctors, hospital pharmacies and the like. The patient, at least those with health insurance, end up paying the price, but much of those costs are paid for by the insurance company or Medicare. Medical decision makers’ criteria are usually not how cheap or expensive a drug might be; instead, they select those drugs that are the most efficacious with the least number of side effects for their patients. In the textbook industry, teachers (mostly professors), are the decision makers at colleges, and like doctors, could care less about the costs of a textbook to the student. They demand the most up-to-date educational information possible, since they strive for academic excellence in the classroom. It doesn’t help that today the information advances occur at such a rapid pace that most books are out of date by the time they are...

The student loan crisis

Student loans have now become the second-largest pile of consumer borrowing, after home mortgages. What’s worse, it is the fastest growing slice of American household debt and shows no sign of slowing down. Young Americans are going to college in droves. At the same time, the costs of higher education are at historical highs. That combination has become a lethal cocktail that could hamstring young workers over their entire life and along the way damage the overall economy. Since the financial crisis and Great Recession over a decade ago, student loans have grown by almost 157%. Compare that to auto loans, which have risen 52%. In the case of mortgage and credit card debt, we have seen a decrease by about 1%. At this point, the total loans outstanding amounts to $1.5 trillion, almost the same as this year’s tax cut. If students graduate and land a good-paying job, so the theory goes, they should be able to service that debt and ultimately pay it off, even if it takes half their lifetime to do so. But, if you ask the 44 million Americans with student debt, that is not what’s happening. Many graduating students can only blame themselves for their predicament. During the financial crisis and its aftermath, many students figured going to college would provide the skills that have now become the minimum requirement to land a well-paying job. What’s worse, their parents–who should have known better–allowed their kids to pick and choose what they wanted to study. It turned out that many of those degrees (in liberal arts, for example), failed to provide enough money to...

Estate planning is for all of us

Here is a trick question. What did Aretha Franklin, Tupac Shakur, Martin Luther King, Jr. and Abraham Lincoln have in common? They are all famous people who died without a will. In the case of the “Queen of Soul,” she died in August leaving $80 million and according to Michigan state law, those assets should eventually be divided up among her four children. In the meantime, the entire estate must go through the probate process, which is both expensive and time-consuming. Some other famous people who failed to prepare their heirs and beneficiaries for their eventual death are: Jimi Hendrix, Bob Marley, Howard Hughes Sonny Bono, James Brown, Prince, and Michael Jackson. Some of these unclaimed estates are still going through the probate process and could remain there for years to come. One might assume that those with a great deal of money would make sure that their estate was protected. After all, they have the money and the opportunity to hire the expertise they needed to put things in order. Obviously, in the above cases, that wasn’t true. Therefore, it should come as no surprise that roughly 64% of Americans don’t have a will. That number is even higher for younger people (over 70% for those 45-54 years old). The most common answer for those questioned is that they simply have not gotten around to it. About 25% just don’t feel that it is urgent. Some other reasons people procrastinate are that it is depressing to face the eventuality of your own death. Others believe that lawyers are expensive and wills and such are costly. The same people...

Credit freeze for free

  It just got cheaper to freeze your credit files, thanks to the Economic Growth, Regulatory Relief and Consumer Protection Act. But should you do it? The law, signed by President Trump back in May, only took effect this month. It requires the three major credit reporting bureaus—Equifax, Trans Union and Experian—to drop the fees to freeze your credit. Those fees ranged from $3.00 to $10.00 per person, times three credit bureaus, plus more charges to “thaw” your credit. Consumers can now also un-freeze their files, either temporarily or permanently, free of charge. Thanks to a recent spate of credit breaches, Congress felt it needed to do something about the problem. Readers may recall last year’s credit breach at Equifax and its aftermath. Hackers stole personal data, including Social Security numbers, birth dates, addresses and even some driver’s licenses from an estimated 143 million people in the U.S. Another 210,000 credit card accounts were also at risk. To make matters worse, the company knew about it, but kept quiet for some time before revealing it to the public. There had been a flurry of hearings, investigations and demands from both sides of the aisle to do something about it. Then there was the Yahoo breach in 2016, where over one billion users were impacted. Several banks, including Citibank as well as countless department stores, have reported hacking of information for millions more users. Thus, the new legislation. So, what exactly is a credit freeze? It is a way to protect personal information from credit fraud and identity theft. Once you freeze your account, no one can get access to...

How prepared are you to sell your company?

If you are a small business owner and are toying with the idea of someday selling your company, you should pay attention. Only one in five small businesses put up for sale result in a closing. How do you become one of those success stories? Where I live and work, nestled in the Berkshire Mountains of Massachusetts, there are relatively few large companies. We are over-populated with “Mom and Pop businesses.” As such, I meet and talk to plenty of these enterprise owners daily. An overwhelming number of these entrepreneurs have saved little or nothing towards their retirement. Instead, they believe that at some point, someone would swoop in and buy their business, guaranteeing a financially secure retirement. Despite taking a hardline approach to the realities of running a business, most owners do not have a realistic sense of how to sell a business. The two are completely different animals. I recently got an education in the difference by reading a book written by Allen P. Harris entitled “Built It, Sell It, Profit.” It’s a slim book, well-written in layman’s terms, which I suggest you pick up. In it, Harris addresses the big questions that need to be answered if you have even a hope and a prayer of selling your business. The first question to ask is “What should I be doing today to build my business toward ‘maximum value?” Harris would tell you that you will need to begin planning that sale for at least three to five years ahead of time. The things that you overlook in your day-to-day running of the business won’t be overlooked...

Should you bury yourself?

In today’s world, the idea that you should prepay, or at least set aside some money to cover your funeral expenses is gaining traction. Given the escalating costs of paying for a loved one’s funeral, it is no surprise. Most of us don’t want to face it, let alone discuss it. In some quarters, it is “bad mojo” to consider planning for your death, so pardon me for bringing up such a squeamish (some might say ghoulish) subject. But as your fiduciary in all things financial, I feel obligated to discuss prepaid funeral expenses. This year, I was introduced to this concept when my Mom died. She was 93 years old, bless her soul, and had a good life. Independent to the end, she secretly arranged for her own funeral expenses in 2000 along with specific instructions on what should happen at her passing. She wanted no fuss, no bother. Her remains were cremated, and everything was signed, sealed and delivered before I could make the five-hour trip to her home in Pennsylvania. My mother turned out to be an astute investor when it came to her death. Funeral expenses during that time (2000-2018) increased by 75.74%, according to the U.S. Bureau of Labor Statistics. Her arrangement to prepay her expenses protected her from rising costs and provided a convenient and stress-free experience for me and the rest of the family. However, there are pros and cons of pre-paying for your funeral. A prepaid funeral plan is an arrangement between you and a funeral home in which you make an upfront payment to the funeral home today. The agreement...