The 6 Smartest Purchases I Made In My 20s | The Financial Diet

[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 for TFD viewers. The first 100 people to sign up
at the link in the description will get three meals off their
Blue Apron order totally free. Blue Apron allows you to create
delicious, chef design recipes at home, like this awesome
cheesy broccoli pasta dish that Lauren and I
are whipping up here. Blue Apron delivers all
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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.

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