[MUSIC PLAYING]
Hey guys, it's Chelsea from The Financial Diet.
And this week's video is brought to you by Blue Apron.
So a couple weeks ago, I made a video
about the dumbest purchases that I made in my 20s.
And, a, you guys really seemed to like it.
But, b, a lot of you also asked for me
to do the opposite-- a.k.a.
the smartest purchases I've made in my 20s.
And I agree that that is a super helpful and interesting topic.
And actually was kind of harder to come up
with when I put my mind to it than the dumbest purchases.
Because it's not always easy to identify the things
that really had value for you in the long-term.
But I did my best to come up with the six purchases that
have made the most difference in my 20s and which I would
recommend to you if they apply, or something similar if they
don't.
We're going to talk about not just the purchase themselves,
but the reason behind them and why they've had such an impact.
And maybe they'll help your 20s be a little bit
financially smarter.
My first purchase in my 20s that was by far the smartest
was when I paid off my defaulted credit card all at once.
So some of you guys might know the story,
but basically I was 18.
I got a $500 credit limit credit card.
It was a Visa.
And it had Hello Kitty on it, which it should be illegal.
Like, you can't put Joe Camel on a pack of cigarettes,
because it's going to want to make kids smoke.
Like, the fact that I had Hello Kitty on my credit card
made it feel even more like not real money.
But anyway, so I got this credit card.
I maxed it out immediately.
Don't ask me what I spent it on, because it
was all dumb bullshit.
And then I just threw the card away.
And I was, like, well, that was fun.
I really didn't have that much of a concept of a credit score,
or making timely payments, or basically any impact that that
could have on my future.
Obviously, I knew you were supposed
to pay back the credit card.
But I just didn't think it was that big of a deal
if I didn't do it.
But long story short, the notices came,
the alerts in the mail came, the phone calls came, and then
it went to collections, so more phone calls.
Plus over time with interest, it went up to
over twice the initial amount I spent.
And by the time I was really confronting
the idea of paying for it, I was looking
to settle with a third party collection
agency for about $1,200.
But there was a point at which I was like, OK, I'm 22.
I'm going to start my adult life in earnest.
And I can't do that unless I get rid of this debt that
is hanging over my head and really
messing up my credit score.
So there was about a four month period
where I was working extra.
I was saving up a ton of money, living really frugally.
And I just decided, OK, I'm going to pay this debt off
all at once, because I really didn't trust myself
at that time in my life to make any kind of payment plan.
Plus, with collections debts like that,
often if you pay it off all at once,
they give you a discount on it, which they did for me as well.
So at 22, I paid off that debt in full.
And I can't even explain to you the amount
that it changed not only my perception of myself,
but my perception of what I was capable of.
Before that, I'd never really made
any kind of big important and positive financial decision.
And it suddenly made me feel so empowered.
If there is a similar thing hanging over your head
financially, before you do anything else in your 20s,
I recommend getting a handle on it
even if it's just setting up an automated monthly payment
so you know you're chipping away at it.
It's not just about what it will do for your finances
and potentially your credit score,
it's about what it does for your self-esteem.
My second smartest 20-something purchase
was investment outerwear.
Hello, Mona.
Unlike Mona, I am not covered with a convenient layer
of fur and little pads on the bottom of my feet
that protect them.
For the longest time, I lived kind of
by the unspoken financial ethos that the cheapest possible
option was the best financial option, especially when it
came to things that I put on my body or in my house.
I spent a lot of time going to fast fashion stores
and getting things secondhand from who knows where they came
from, and just generally thinking
that if I got the best value for dollar at the time of purchase
that that was the smartest financial decision
for my clothes.
Needless to say, I ended up with, a, things
that would just straight up disintegrate
in the washing machine-- a.k.a.
basically anything from Forever 21.
I also had coats that surprise, surprise didn't
keep me warm in winter because they were made out
of, like, cardboard and Saran wrap
and whatever else H&M coats are made out of.
But all of that to say, once I got to the age of about 24, 25,
I was like, Chelsea--
this is me talking to myself in the mirror--
I'm like Chelsea, you got to start
investing on things, especially things that go on the outsides,
such as coats, shoes, purses even
to an extent that you're going to wear everyday, jackets, etc.
Like, you cannot be wearing things that are essentially
going to disintegrate as you wear them,
because you are going to spend more money replacing them.
So now when I get things like boots or my yearly winter coat
that I wear almost every day, I always go the extra mile
and get something nice.
And if you're someone who can't right away be affording
to invest in really nice outerwear and shoes upfront,
I highly recommend you go to a thrift store or consignment
store, because you will be shocked
at the amount of leather and wool,
and pretty good quality outerwear
that you can find for a fraction of the retail price.
I also have found that for this kind of stuff
department stores are amazing because they usually
have great sales going on, plus coupons you can add.
Either way, spend the extra dollar
if it's basically anything that's
going to interact with the outside world.
Number three is sort of a two for one.
And that's having an accountant and making an LLC.
So before I even started the financial diet when I was just
a writer and I had a full time writing job,
but I also did freelance writing and projects on the side,
I learned pretty early on that it's very beneficial to become
an LLC of just yourself.
That means instead of being an individual,
you are now a tiny company and you file taxes
as such and the state recognizes you as such.
I happen to form my LLC through a lawyer.
But you can also do it on sites like LegalZoom
for very little money.
And basically it helps in a few ways
if you are ever doing any kind of freelance work.
A, it makes it much easier and more
streamlined to file your taxes, as well as easier to take
the expenses that you should be taking
if you are self-employed.
B, it immediately gives you an added layer
of respect, professionalism, and seriousness when you're
interacting with clients.
And C, it protects you.
Because let's say for whatever reason
you get into some kind of legal trouble with your LLC,
someone who's coming at your company for financial reasons
can only go at your LLC and not you as a private person
in your finances.
I've realized especially in the past five years
that there's this whole kind of secret world
that wealthy people have when it comes
to protecting their assets and getting the most
value from their work and maximizing what they spend
versus what they earn, particularly
when it comes to taxes.
And while of course you should be
paying your fair share of taxes, you should also not
be overpaying them.
And that's where, for me, having an accountant
has proven so invaluable.
Now obviously with The Financial Diet,
that's a company with multiple people.
So that requires an accountant not just for the tax part,
but for the day to day management of the business.
But even as an individual, even before I had The Financial
Diet, having an accountant helped
me do my taxes as a freelancer and a person
with multiple streams of income was invaluable.
If your taxes are in any way unusual,
even if you have just a couple streams of income,
or there's something different about the way you work,
or you're freelance, get an accountant.
For my personal LLC taxes, which in my case
also counts as my personal taxes,
I pay between $300 and $450 per year.
And it saves me vastly more than that on a year-to-year basis
just in being able to properly navigate and advocate
for myself.
It's not for everyone.
But if you want to even be partially self-employed
or have a sustained side job, it's
probably worth it for you to, a, become an LLC,
and, b, have an accountant help you at least once navigate
your taxes.
I'll link you guys to more information on both of those
below so you can get started.
Number four is Mona.
Mona is my dog, obviously.
She is three years old.
She's a mutt.
She's part having Havanese, Maltese, and Pomeranian--
as a lot of you guys have been asking about her.
I'm someone who grew up my whole life having dogs.
So obviously, it's been very natural for me
to have one as an adult. But I can
say without a shadow of a doubt that the money that we spent
adopting her and that we pay every year for her
to just be a dog in this world and be healthy
is enormously worth it to me.
Having a pet is a wonderful thing for mental health,
for relaxation, for reducing anxiety,
and also just learning to love and care for something
and be responsible.
Obviously if you're not an animal person
or you're not able to care for one properly,
you shouldn't feel obligated to get one.
But if you have been thinking about it for a long time
and are in a place where you can afford it and take care of it,
I would definitely encourage you to get an animal of your own.
We'll link you guys in the description to a video
that Lauren recently did with the host of animal wonders,
Jessi, where she explains some more uncommon pet
options if a dog or cat isn't possible for you,
as well as teaches you more about caring for them properly.
Mona has made me a more responsible person,
a more loving person, and a less anxious person.
And even though sometimes she jumps in uninvited
and messes up our filming schedule, I love her so much.
And I would encourage you to think
about adopting a dog as well.
Number five is a dutch oven.
I'm someone who cooks a lot.
And obviously if you are someone who
doesn't cook a ton yourself, it will take you some time
to work into knowing what is right for you
and getting used to the act of cooking every day.
But as someone who grew up in a home cooking
everyday household, I didn't realize just how much of that
was enabled by the fact that my mom who cooked every night
was a stay at home mom until I was about 12 or 13.
And that's where for me, a dutch oven has proven so helpful.
Dutch ovens are wonderful for cooking all kinds of food, even
baking bread.
But they're particularly good for things like soups, stews,
braised meats, or anything that cooks for a long time
and in big quantities.
I'm actually treating myself this Christmas to a nice dutch
oven that I've been eyeing for a while.
And I'm actually really conflicted about which one
I want to get.
Because the thing about a good dutch
oven is that they are guaranteed for life.
There are very few purchases today
that you can truly say are once per lifetime purchases.
But good dutch ovens actually are one of them.
And on that topic, I would really
recommend the subreddit Buy it for life,
which has tons of great info about various items
that you buy once and are guaranteed for forever.
But from how useful it is on a day to day basis, to how much
it allows me to meal prep for a household
where I don't always have time to cook in the evenings,
to the fact that a good one literally
lasts your whole life, this is a super smart purchase
that I think almost anyone in their 20s could benefit from.
Now, my last one is a bit unique to my situation.
But bear with me.
And that's a ticket to France.
And for me, the purchase is not actually the ticket itself
to France, but rather what it represents
and what it created in my life and what
I believe a similar purchase could create in yours.
As a lot of you maybe know, French is my second language
and I spoke it fluently before moving to France.
So I was able to move to France with a job that
allowed me to live there, and earn money, and go
to school at the same time.
So financially, it was a solid decision
that I had a lot of footing for.
But emotionally and symbolically,
that ticket to France was a very important decision
that for you might be totally different.
It might be buying an RV or getting a ticket to somewhere
totally different than I went, or going back
to school for something, or whatever it might be.
The point is I think everyone in their 20s benefits
from a few serious fork in the road
financial decisions where they have to force themselves
a little bit into making it, whether that's a deposit,
or buying something outright, or signing a contract,
or whatever it is that really forces you to throw yourself
into the deep end.
When I bought that ticket to France,
which was a lot of money for me at that time,
it wasn't just the flight.
It was a deadline in my life that
said, OK, not only do you have to be prepared
for this logistically, have the money saved up
for when you arrive, you have to get
rid of a lot of your belongings before you leave,
you have to close all of the loops with your current job,
internship, et cetera, it really put a marker in my life.
And it also forced me to get out of a rut I was in.
Because what I was doing in America at
the time just wasn't right for me
and it wasn't going anywhere.
But I knew that unless I had some sort of big move
or big decision that was going to jerk me out
of it, that I could have continued
circling the drain for years.
Whatever that one big item might be for you, having that goal
post in your life, that unchangeable thing that you
have to be prepared for that you've already committed to
forces you not just to make that change when the day comes,
but to really prepare yourself in every way in the lead
up time.
Let's say for example that yours is signing up
to go back to school.
Don't just think about the day that you start class.
Think about everything that you're
going to have to do to make it a possibility
before the semester starts.
I have found that one of the biggest
hurdles for a lot of people in accomplishing their bigger
goals or bigger changes, whether that's let's
say quitting a job, or moving, or starting something
new in their life, is that they don't give themselves a firm
deadline that they can't negotiate with.
The issue is usually not that we try and fail.
It's that we keep pushing it off and pushing it back
until we never try at all.
In our 20s, especially our early 20s,
are the time in most of our lives
when we don't have children, we don't have mortgages,
we're not married, we don't have a lot of the responsibilities
that will make it logistically impossible or very
difficult to make these decisions in the future.
Sometimes what you're really buying
is a date on the calendar circled with red Sharpie
that you can't put off.
For me, that purchase was a flight to France
that changed my life not just because it's
a place where so much happened for me,
but it was a time in my life that I
proved that I wanted to make a huge change
and I was capable of doing it.
So those were some of the biggest purchases
that made a huge positive impact on my 20s.
And yours might look totally different.
But hopefully we can all share the lessons
and have common ground.
So tell me about some of your smartest 20-something purchases
in the comments below.
And remember that some of the biggest changes that we make
in our lives, like becoming prolific home cooks,
can start with the smallest purchases,
like signing up for Blue Apron and learning
how to cook in your own home.
So Blue Apron is offering a special promotion
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So as always guys, thank you for watching.
And don't forget to hit the Subscribe button
and to come back every Tuesday for new and awesome videos.
Bye.