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In this video, Chelsea illustrates the one money rule to live by if you want to get control of your spending: understanding and planning for cost per use.

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Hey, guys.

It's Chelsea from The Financial Diet. And this week's video is sponsored by CleanMyMacX.

And for those of you who are wondering why I'm not in my usual spot at home for the Tuesday video I'm actually in the TFD office on the Financial Confessions set, for those of you who might recognize. But hopefully the content will be just as homegrown and delicious as when I make it in my own living room. And for today's video, I wanted to take a moment to do something that we are often asked.

I'm often asked this by our audience. When I do interviews, I get asked it. It's a very, very frequent question when we do events.

And that is what is your number one money tip? And it's often a pretty difficult thing to drill down on because, quite frankly, depending on your lifestyle, depending on your needs, the budget that you're working with, the most important quote, unquote thing to do is often going to be different. Someone who is working in a comfortable salary and is building toward a robust retirement is not going to necessarily need to be making the same choices as someone who is living paycheck to paycheck and hasn't yet saved up their emergency fund.

So I do think in terms of making general prescriptive rules, it's pretty difficult to find one that works pretty much across the board and is important to everyone, except like maybe Jeff Bezos. But hopefully, he's going to get stuck on Mars and won't be our problem anymore. And so after giving it a lot of thought, I think that the most relevant number one money tip that not only applies to everyone but really applies to any situation or any eventual goal or really any type of spending habit.

You can be the kind of person who doesn't really care about new clothes, but maybe spends a lot on outdoor supplies, like my husband's family. Or you can be like me, a hedonistic 32-year-old, who spends on nothing but her own fleeting personal enjoyment. And that is analyzing any given purchase on cost per use.

And the reason why I think that this is the most important money rule is because, ultimately, nobody can tell you what purchases are and aren't worth it in an abstract sense. All you can really use to judge your spending habits is how valuable a given purchase is to you. And holding yourself accountable to really analyze the extent to which you're getting value out of a given purchase doesn't just help you make better money decisions, it also helps you become more generally conscientious and intentional with your money habits.

Now of course, there are some exceptions to this rule, in the sense that there are certain things that you buy that are one time use. I'm thinking things like a plane ticket or a concert. And it's not always necessarily totally predictable how many times you may be able to end up using something else.

Your life could change. Your needs could change. Your body could change.

And something that you bought as an investment piece could end up not being able to be used that much. But overall, cost per use on a general basis is one of the best ways to break down the value of any given purchase or dollars spent. And figuring out cost per use is actually remarkably simple.

For example, a pair of fast fashion sandals that costs you $30 that you wear approximately 20 times before they give out would cost you $1.50 per share versus a well-made pair of sandals which cost $200, but would you wear three times a week every spring and summer for five years. That's 360 wears, bringing the cost per wear down to about $0.55. But before we start really diving into calculating and planning for cost per use, we do have to get one thing out of the way.

Cost per use above all necessitates taking care of your things. And this especially goes for big ticket purchases, like expensive electronics. And while a slow computer can make anybody feel less than optimally productive, let's say, that does not mean it's time to go out and buy a new one.

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Just click the link in our description to get started with CleanMyMacX today. But so when and how do you apply cost per use? So electronics are one area where cost per user always pays off.

Using the laptop example, let's say that you use your computer for work 240 days a year. If you spend $1,500 up front on a nice MacBook or PC, but you can get seven good years out of that computer, that means your cost would come down to about $0.89 per day. On the other hand, let's say you get a less expensive laptop that only lasts you two years.

If you use it on the same number of days, your computer's cost per use would be about $1.45, nearly a 63% increase. This shows you the difference between an item's outright cost and its value. If you have to replace a less expensive item more often, chances are you'll end up spending more overall because buying $100 computer in a seven year period is going to cost you 1,500 total versus buying three $700 computers in a seven year period, which would cost you $2,100 total.

And of course, before making this sort of purchase doing your proper research on which one actually is the right one for your needs is crucial. Places like Wirecutter, Ars Technica, and Consumer Reports are a great place to start. And you can apply cost per user to anything, not just electronics, one of my favorites being furniture.

For instance, spending $2,000 may seem like a lot for a couch. But if it's beautiful, comfortable, timeless, read not a trendy color you will get sick of in six months, a durable material, and you actually take care of it, there is a good chance that you will get 15 years of use out of it. Whereas going for the $400 futon, on the other hand, will likely mean that you need to replace it within two years.

And if you keep replacing your $400 couch with another $400 couch every two years, you'll end up spending $3,000 on couches in 15 years. And let's be clear. This isn't just about spending more over time, it's also about creating a lot more waste.

Each year, Americans throw out more than 12 million tons of furniture and furnishings, according to the EPA. Only a small percentage is recycled, thanks to the diversity of materials and most items. Upholstered furniture and mattresses are particularly hard to clean and reprocess.

As a result, more than nine million tons of wood, metal, glass, fabric, leather, and foam waste end up in a landfill. In general, we also have to remember that when it comes to things like furniture and clothes, you're often getting what you pay for, meaning that when you're opting for things that were made with super cheap materials and often things that we refer to as knock-down furniture, i.e., you're intended to assemble it once, but then to not be able to disassemble and reassemble, a.k.a. knock it down at the end, you're almost guaranteeing yourself that you are not buying a quality product that's meant to last. Lest we forget, these companies who make these cheap products entire business model is dependent on the idea that you will need to buy several of these items over time.

If you could buy one $400 IKEA couch and have it last you for 20 years, IKEA would be out of business. And while occasionally you can get a good deal on a better product, usually when you're buying things like fast furniture and fast fashion, we're essentially acclimating ourselves to expect a lower level of quality and to normalize it. This is why one of my all time biggest tips when it comes to furnishing your home is to always pick items based on material.

Things like wood, metal, glass, et cetera are generally higher quality and built two last. Things like particleboard, MDF, et cetera are not. And here's the thing.

And I do want to make a serious statement about this because I know that if I don't it will be the top voted comment. And you guys will be right to drag me for it. Being able to opt for investment pieces up front in almost anything you buy is a financial privilege.

And honestly, the inability to buy higher quality items up front or to be able to buy in bulk is one of the key issues that keeps people locked in a cycle of poverty. Making those higher end choices is, of course, a luxury. However, A, with a lot of items, furniture being a great example, there's often just as much, if not more, of a deal to be had buying items second hand on places like Craigslist or Facebook Marketplace or your local thrift store.

But also, even if you can't necessarily afford to make this choice for every item you're buying in your life, chances there are a few distinct areas where you could be opting for a lower cost per use, but perhaps higher upfront investment item, and aren't currently doing it. This is why it is so essential to get good at things, like thrifting, at any price range. Because even if you can't afford to be buying higher quality items up front, insisting on buying everything absolutely new is still terrible for the environment.

So at least, put yourself to the challenge of saying, OK, maybe my budget for a new dining set is only a few hundred dollars. So I can't opt for the really nice ones made out of real wood at a store. And you're considering buying an IKEA set.

Check out some of those local sites and thrift stores to see if you could get a similar or even better deal before you totally write off the possibility of buying something high quality. On that note, my mother is an absolute maven at all things home decor and also probably the most frugal person I know. And every time I talk to her or go over to her house, I'm like, wow, that armoire is fabulous.

She's like I know it was $20 from some old crazy man on Craigslist. Like she loves a deal. And she only buys stuff on Facebook Marketplace and places like that.

And she has the most beautiful furnishings. And it's all like this gorgeous like wooden stuff from the 50s. So there you go.

But in general, this whole cost per use phenomenon is about changing your relationship to spending. For most of us, this gradual change over time, in terms of getting used to buying things that are not made to last and are of low quality, is in our fast fashion choices. We've gone from having two seasons a year to having up to 52 micro seasons because people just want new clothes all the time.

Of course, this is exacerbated by the fact that, on social media, we have a tendency to not want to repeat the outfits we wear. But also, because with fast fashion being so inexpensive, the idea of being able to buy an entirely new wardrobe every couple of months seems normal to us. Also, side note, but haul videos should be illegal.

It's such a toxic thing to put on YouTube. Stop doing haul videos. Or TikTok.

Yes, sorry, TikTok. Sorry, children, TikTok, too. Someone recently did a $500 Amazon haul on TikTok.

And like, A, did you buy all of Amazon? But also B, why not just give your kidney directly to Jeff Bezos? But in general, I think really acclimating ourselves to expect that we should be buying the highest quality items that we can within our budget is crucial.

And on top of that, it's important to remember that, although I assume if you're watching The Financial Diet, it's because, on some level, you love a good deal. And I love a good deal. We all love a good deal.

Deals are great. But often, what is a quote-unquote "good deal" up front can be extremely misleading. We have to start having a slightly longer vision on what we consider a good deal and make sure that we're holding ourselves accountable and keeping up with those purchases that we made to make sure that we're not just deluding ourselves to thinking the sticker price automatically made it a good deal in the long term.

Now, I'm not going to ask you to go Chelsea Fagan intense on this and have a spreadsheet where you're tracking the number of times you've used a certain thing. But I do think for certain key purchases, it is important to really keep an eye on how much value you're actually getting out of it. Because while, yes, something may have been a better deal up front, often those numbers totally change over a given timeline.

So being more discerning about what you even consider a good deal is important and on top of it, will help make you a little bit more immune to the constant sales and promotions and offers and exclusives that we're all being bombarded with. If you feel like over the past few years, every store is basically permanently in a sale, that's not your imagination. That's actually a thing that stores do because it encourages people to buy more.

It's good to get a good deal. But it's not good to fall victim to every sale that comes along. And what is the best way to plan for cost per use, overall, in your general financial life?

It's having a budget and making plans for purchases rather than purchasing things on a whim or again, being victim to whatever sale email comes into your inbox. And listen, Banana Republic, I love you. But I don't have any more money.

Stop sending me newsletters. I can only own so many blouses. And that's why, also, when it comes to your saving strategy, having various sinking funds-- and if you don't know what they are, we'll link you to an explainer on that in the description-- where you're actively saving for different big purchases.

So you're encouraged not only to plan for them in a thoughtful way, but you already know ahead of time how much you should be allocating for that purchase, based on your budget, rather than making the purchase on more of a whim, when you haven't really planned for it. But one place we can all start being more conscientious about our cost per use is in our everyday electronics. And if, like me, you use, a little bit abuse, your Mac, you will want to check out CleanMyMacX at the link in our description to make sure you are getting the best possible cost for use out of her and keeping her young and healthy and vibrant and fast, the way a Mac should be.

And as always, guys, thank you for watching. And don't forget to hit the Subscribe button and to come back every Monday, Tuesday and Thursday for new and awesome videos. Ciao.