Navigate to the Squeeze pull-down menu and select Preferences.
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By default Same as Source is selected. To set another location for your output files
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click the Radio button and the Browse button to navigate to the new destination.
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Navigate to the folder that you want to save files to. In my case I'll select the Movies folder. Next click the Choose button.
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Now the Movies folder appears as my Default Output Location. All files encoded will now go to this output destination.