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Chelsea breaks down the purchases that made her smart with money in her 20s, from a plane ticket to a very specific kitchen item. On the other hand, she talks about the dumbest purchases she made here: https://youtu.be/o1DfwC7kkxs

Should You Form an LLC For Your Small Business?
https://www.moneyunder30.com/should-you-form-an-llc

How to Make an LLC Yourself:
http://info.legalzoom.com/make-llc-yourself-4515.html

What You Need to Know Before You Get a Pet:
https://www.youtube.com/watch?v=z4VOPWMHKcA

The Financial Diet site:
http://www.thefinancialdiet.com

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[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 the farm fresh ingredients you need right to your doorstep in exactly the right proportions.

No trips to the grocery store and no waste from unused ingredients. Blue Apron offers a large selection of recipes and is always adding new dishes to their menu every week. They ship to most of the country and there's no commitment.

You can skip or cancel your service at any time. So don't wait. And be one of the 100 TFD viewers to get those three meals off their Blue Apron order totally free today.

Link is in the description. Check it out. 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. .