Opex/capex strategies

A few years ago we were traveling with friends, and in the car started talking about consumption strategies. We had already previously thought that things can be bought or rented, but our friend had nice terminology for this: opex/capex. These terms come from business, where opex is short for operating expenses, and capex for capital expenses. So people with an opex strategy spend their resources for consumption in the moment that they need something. For example, a summer cottage vacation with an opex strategy means renting a suitable place for a week or two. With a capex strategy, you buy the whole summerhouse for yourself, and use it whenever you like.

The difference in consumption patterns is big: With a capex strategy, you have little to no expenses for the using the summer cottage itself (bar from food, gas and so on). The investment expense is large, but running costs per use remain low. With an opex strategy you can avoid the maintenance costs (and effort!). And if you find that one place wasn’t so fun after all, you can rent a different one next year. However, for this flexibility you pay much larger running costs. Buying a summer cottage can be sensible, especially if you like doing the renovations yourself and you spend a lot of time at the summer cottage. For us, doing that would feel like work instead of fun, so owning a summerhouse wouldn’t be very enjoyable for us.

Notably, in some cases ownership can actually bias how you use your time. I remember one friend from my chilhood, who would be at their summer cottage every single weekend from spring until autumn, because once you owned the place, you’d better damn use it too! On the other hand, investing in equipment can be a good motivating factor, like when you get a new fancy road bike. Still, this can backfire and you just end up with an unused piece of equipment wasting space in the garage.

A summer cottage is naturally not the only possible investment in one’s life. In many cases, ownership doesn’t pay: who buys CDs or DVDs anymore? With us and most friends physical disks are history, and what’s replaced them is Spotify, Netflix, and Google Drive for hard drives. We don’t have a car either, but get around by bike, bus and taxi.

Which consumption strategy should you use then? There’s no single answer, as it all depends on your preferences. If you have the capital and you don’t mind spending time and money on maintenance, buying something to own it can make a lot of sense. If you rarely use something, or don’t want to maintain it, then maybe renting is the better option.

Opex strategy is of course the preferred choice of lean life enthusiasts. Experience has shown that we often overestimate how often we need something. As long as closets stay closed and maintenance costs are not visible, the illusion of cheap ownership remains. However, in real terms a summer cottage that you use two weeks a year can suck in an enormous amount of money. For this reason, we’ve pre-emptively try to limit the amount of things we own.