Household Debt Service Ratio is All time High

It is "an estimate of the ratio of debt payments to after-tax income." 13.4% is the highest since the Fed kept the statistic beginning in 1980. I don't think that sounds too bad at all. But when you consider the savings rate trends:



...we made be in for some heavy pull back in consumer spending, and corresponding ripple to the economy. Consider what happens when the household debt service ratio naturally increases because of rising interest rates.

Saving money will become a new popular past time. Stay tuned.

Price Customization on the Net

"...most of us are clueless about how much personal information is collected, let alone how it can be combined with other personal data to give businesses an edge." source.

I'll never forget a trip I made to Russia in the early nineties. We visited the newly minted commercial district in Moscow where merchants sold many things, mostly to tourists. Young men on the street were eager to make deals if only to trade a watch for a belt. (He pointed to my belt and showed me a variety of old KGB watches. I took the deal.) There were a few old style Soviet stores with minimalist shelves and gruff attendants; no prices were marked, you had to ask the attedant. Our Russian student hosts told us that if we saw something we liked in such stores, we were to tell them and they would independently enter the store and buy the item we desired. If you didn't speak flawless Russian, the merchants practiced price customization, a different price for foreigners and a different one for locals.

A recent study called "Open to Exploitation" has revealed that Russian stores aren't the only ones practicing price customization. Internet retailers have been quietly collecting information on our spending habits and sites visited to get a business edge. This article tells us: "The Internet empowers careful shoppers to conveniently compare prices and features across thousands of stores. But it also enables businesses to quietly collect detailed records about a customer's behavior and preferences and set prices accordingly." In case you are not aware, your internet habits are carefully watched through "cookies".

Customers' internet buying patterns are often predictable; people like to travel well worn paths. Despite the ease of comparison shopping on the internet, consumers still have "brand loyalty" to their favorite sites. Retailers know this and often raise the price of an item the more often you visit their site. A guilty party: Amazon.com. Reports tell us that Amazon charged different prices to those consumers on computers whose cookies had been erased, while the loyal customer paid more and more. Amazon.com brushes it aside as "random experimentation".

Just because something is sold on the internet does not mean it has the best price. The opposite could very well be true: Because it is sold on the internet, it has the price customized especially for you: the highest price you'll pay. Businesses are clever and its their job to squeeze the highest possible amount of money from you while your part in the game is to get the lowest possible price.

Maybe the Biggest Rip Off of All

What is it that would vociferously steal most of our money, time, and efforts for most of our lives? It sucks our very life from us as we toil and toil at jobs we don't like. It thrives in our neighborhoods and at our social clubs. It rips us off on a daily basis? What is it?

Taxes? Good guess, maybe thats number 2.

It is our definition of sucess and our appetite for being "rich". It is our very own appetite for our version of financial success that rips us off of what give our lives meaning. What does it take to be rich? It varies by the individual and almost always depends on your peer or work environment. Take a look at what it takes for a NY investment banker to feel rich down to a small business owner in middle America.

Its fascinating to see what different people need to feel rich and what they believe they need to do to get there. We become mired in our thinking and believe we must follow convention or others to achieve our level of success. Bertrand Piccard, speaking of his recent globe circumnavigation had some advice recently on this: "...`The definition of success is if you try just one more time.'' Asked why he and his team succeeded when his competitors failed, Piccard said, ``We had the strategy of the wasps. Our competitors had the strategy of the bees.'' He explained that bees die as they try to enter through terrace windows as they attempt to enter through one pane of glass. They are stuck in their ways.
Wasps, on the other hand, adapt and learn to test each pane of glass until they find an opening."

Challenging our old way of thinking about leadership and success is step one. This week's Newsweek has an article on business innovators and new business thinking. "Many realize that today the best way to become a leader isn't to spend 20 years slogging upward at a corporate behemoth—it's to strike out and start your own gig, which you'll lead from day one." Hmmm, sounds like those slogging might be missing something.

Adjusting our appetites might be the best way to avoid the rip off. It doesn't take much for some people to feel "rich". Some of the happiest people I know are blue collar workers. Look at this survey in Britain that shows blue collar workers more satisfied than white collar workers. Adjusting spending habits, saving more, and consuming less might just be the road to happiness.