Hi All,

A good friend sent us this story. Its a great piece on the Lehman Brothers bankruptcy. It explains the mechanics of credit default swaps and how the complexity associated with these financial instruments ultimately contributed to last years collapse of the firm.

For what its worth, I don’t understand CDO. My wife and I also try to keep our own personal finance simple. For example, we don’t trade stock short and don’t mess around with reverse convertible bonds or other exotic products. Its all about saving and investing, as simply and as directly as possible. If you do that, you are on the right path for building your wealth.

Link to the story here.

Hat tip to the indefatigable Miles MG.

Best,

James

MANAGE YOUR MONEY TOGETHER

Here are some simple guidelines for DINKS to build wealth:

1) Collaborate: Meet regularly to talk about money, set goals together, track and monitor them.

2) Understand and respect your partner. Take time to understand your partners values about money.

3) Watch the numbers. Get a budget, monitor your spending and track your net worth.

4) Max your retirement. Maximize contributions to your tax deferred retirement accounts.

5) Invest in stock. Stocks perform better than bonds or cash.

6) Avoid high interest debt. Credit cards and title loans are financial cancer.

7) Diversify. Don't put all your eggs in one basket.

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