Kevin Kroskey's Money & Mind

According to the Student Loan Marketing Association (more commonly known as Sallie Mae Bank), the average tuition, room and board at a private college comes to $43,921. Public tuition for in-state students at state colleges amounted to $19,548 (about half of which is room and board), with out-of-state students paying an average of $34,031. How are parents and students finding the cash to afford this expense? Sallie Mae breaks it down as follows: 34% from scholarships and grants that don’t have to be paid back, coming from the college itself or the state or federal government, often based on need and academic performance. Parents typically pay 29% of the total bill (an average of $7,000) out of savings or income, and other family members (think: grandparents) are paying another 5%. The students themselves are paying for 12% of the cost, on average. The rest, roughly 20% of the total, is made up of loans.  The federal government’s loan program offers up to $5,500 a yea...

We all know that money cannot buy you happiness, right? As it turns out, this is not exactly true. A recent study by University of Michigan economists Betsey Stevenson and Justin Wolfers, examining data from more than 150 countries using World Bank data, has shed new light on the interaction between happiness and the size of your bank account. Their first conclusion: the more money you have, the happier you tend to be, regardless of where you are on the income spectrum. They also concluded that multi-millionaires do not think of themselves as “rich.” However, there do seem to be income levels where a person’s happiness can be increased faster than others are. Princeton University economist Angus Deaton has found that peoples’ day-to-day happiness level rises until they reach about $75,000 in income—a point where a person can comfortably afford the basic necessities of life without worrying where his or her next meal is going to come from. After that, this type of happiness le...

With all the news about long lines at the airport, now more than ever is the time to consider getting yourself "PreChecked". The one most commonly used by travelers is TSA PreCheck. It costs $85 for 5 years. This option is perfect for travelers who are flying within the United States. You'll skip the long lines, keep your shoes on and not even half to pull out your laptop. The other, broader option is called Global Entry. It costs $100 and it's a great option if you plan to travel internationally. Global Entry allows users to expedite the customs procedures in addition to speeding up the typical airport screening process. I personally recommend Global Entry. I originally signed up for TSA PreCheck but ran into an issue. Some of the discount airline carriers I use do not use TSA PreCheck. There is no Known Traveler ID printed on the boarding pass. Thus I was not able to skip the security lines at the airport when flying with these carriers. Global Entry, howe...

“I'm fascinated with the problem of why really smart people have such a hard time predicting the future. It is mostly because the future is more random than we think. But it's also because future performance (like earnings and economic growth) doesn't tell you half of what you need to know to predict future outcomes.” The above was taken from a recent and insightful article entitled Performance Vs Outcomes (Morgan Housel, The Motley Fool). The author described and provides examples in the world of investing that successfully picking what will do well requires not only predicting what may happen in the future, but also out predicting what everyone else’s expectation of what the future will be as well. In other words, to be successful with investing, it’s not only necessary to predict what may happen in the future, but also to evaluate whether the rest of the market is already pricing in that same expectation, or not. For instance, we’ve long known that soda consumptio...

Shareholders of publicly traded companies have an important job of providing a system of checks and balances on the company's corporate governance, including executive pay plans. Agents of the company (executives) have an inherent conflict of interest in maximizing their own wealth versus maximizing the wealth of the principals (shareholders). You can look back to 2008 and come up with a slew of examples illustrating this principal-agent problem , which in part provided the impetus for the 2010 "Say on Pay" rules in the Dodd Frank Act. Bloomberg recently had an intriguing article showing how the largest shareholders of publicly traded companies -- mutual funds -- generally fall in line with corporate boards for executive pay decisions but some notable outliers exist, having a more discriminating view of these pay plans and advocating for shareholder interests. The "most agreeable" of the mutual fund giants voted with directors on executive pay plans 97 percen...

After the recent downturn in the U.S. and global stock markets, you can be pardoned if you wished that the markets were a bit tamer. Wouldn’t it be nice to get, say, a steady 4% return every year rather than all these ups and downs? Be careful what you wish for. There are at least three reasons why you should hope the markets continue scaring investors half out of their wits. 1) The very fact that stock downturns scare people is one reason why stocks deliver a higher return than bonds. Economists call it the “risk premium;” which can be roughly translated as: people are not willing to pay as much for an investment that will periodically frighten them to death as they would pay for an investment that delivers a less exciting investment ride. Over their history, stocks have been a fairly consistent bargain relative to less volatile alternatives, which is another way of saying that they’ve delivered higher long-term returns than bonds and cash.  2) If you’re accumulating for reti...

After a turbulent 2015, stocks tumbled in the first few weeks of 2016, causing concerns that the bull market U.S. equities have enjoyed since 2009 may be over. Plagued by worries about global economic growth, the S&P 500 dropped 7.75% in the first two weeks of 2016.1 While the pullback surprised many investors, corrections in the 5-10% range are not unusual. Since 1928, the S&P 500 has experienced corrections of more than 5% about three or four times each year.2 We see declines of 10% or more every 1-1/2 years, and bear market corrections of 20% or more about every three or four years.3 Obviously, these are all averages and the performance of any single year can deviate significantly from historical norms.  Though market corrections are rarely welcome, they are a natural part of the overall business cycle, and it is important to take them in stride. The most important thing is not to give in to emotion. While it can be tempting to eject when downside volatility...