This is just a recap of some of my popular posts on the site fr my new readers:

1.  How Warren Buffet gets better deals than you? (And how you can do it too).

A analysis of the six simple methods that Warren Buffet uses to get the best deals.

2.  How to select a Checking account? Fees in a checking account? And more.

A complete reference on checking accounts.

3.  The basics of an emergency fund

What is an emergency fund? Why do I need an emergency fund? How much do I need to save?

4.  How to invest the emergency fund?

5. Lessons we all should re-learn from the present financial crisis.

Some personal finance lessons we probably knew about but never

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We are probably already living in the longest recession since the great depression of the late 1920’s and early 1930’s. Many people have lost jobs; many large and small businesses have gone under; it’s difficult to get credit which many were so dependent on and need the most now. For many people like me this is the first recession they are seeing and things have been tough.

Now, I did not intend to scare you by saying all this but it is such difficult times that get us thinking on how could one prepare for such a situation if it was to happen again or still continue to worsen? How one could avoid the adverse effect of such a situation on their finances and wealth?

I read, discussed and pondered and then it struck me that we all knew the solution all along, but probably due to the economic prosperity we have seen in the recent years, one did not give these lessons enough importance. If only we re-learn these five lessons…

Buy a home that you can really afford.

Home ownership is touted as ‘The American Dream’. While home ownership has many advantages, buying a home is a big decision which if gone wrong can have several negative consequences like foreclosure, bankruptcy, etc. If you qualify for a mortgage it does not necessarily mean you can afford it. Buy a house for which you can comfortably afford to pay the monthly mortgage payment for throughout the duration of the loan and not just a teaser rate for the early years.

Build an Emergency Fund.

An emergency fund is like a safety net you can build to insulate yourself in case of any unfortunate events that may happens in your life. When we have a steady source of income we tend to ignore this and assume that things will continue to be smooth.  Some people depend on their credit cards limit for their emergency fund but it is not certain you will have it when you need it. Your credit line may be reduced or worse the credit card company may go under. One should also learn how to invest the emergency fund.

Stock market investment is not for everyone.

Historically stock market returns have been better than many other investments that are easily accessible but there has been significant volatility in their returns in the short run. Any money you need in the near future say 5 years (may be for college tuitions, travel, buying a home, medical expenses, etc.) should not be in the stock market. Passive investment in stock market (aka index funds, mutual funds) can also lose a lot of money (The stock market had tanked more than 50% in the eighteen months leading to March 2009).

Do not over invest in your company’s stock (or sector).

So let us say you worked for Chrysler/Lehman Brothers and also had a significant portion of your investment in their stock (normal accounts or via retirement savings accounts like 401K), what could happen? Your job may be in danger and a significant portion of your investments would have been wiped out, even worse, if you are close to retirement that savings could be your life’s hard work. I guess you see the point.

Frugality

A word that had some negative connotation associated with it has gained some popularity now. More and more people have started seeing the value in saving money for the future, trying to spend on necessities than luxuries and living within your means have become the ‘in thing’.

Received the following email from Lending club:

There’s never been a better time to refer a friend to Lending Club:
With the financial markets showing renewed levels of uncertainty, you know that Lending Club notes offer an asset with little correlation to traditional equity and fixed income markets and average net annualized returns over 9.5%. Notes offered by prospectus filed with the SEC.

We’ll give $25 to invest in Lending Club notes to registered investors you refer. It’s a great way for your friends to become a part of our financial community.

Two ways to invite your friends to join Lending Club and have them receive $25 to invest:

* Have your friends type in this Referred by code when registering: goodlender
* Use this link to automatically upload a list of email addresses and send your friends a personal note:  https://www.lendingclub.com/invite/invite.action <This is not valid if you do not have an account>

Have a question or comment for us, contact us anytime at support@lendingclub.com or call 1-866-811-9225.

Regards,

The Lending Club Team

It seems like they have reduced their joining bonus for invited members from $50 to $25. Its still free $25 to try out lending club.