How to Be Capital Efficient

how's it going everybody this is Victor Bush today I'm going to talk about the concept of capital efficiency and how it helped me retire early what do I mean by Capital efficiency if you start off with a hundred dollars some people would just take it and spend it and the next day have nothing left other people maybe they would save it they'll still have the same 100 and yet others will take the same amount of money buy something resell it and they'll come back with a hundred twenty dollars but even if you're not earning money with every dollar that you spend at least you can get the most value out of it this is what I mean by Capital efficiency this video is brought to you by Mumu the commission free trading app if you sign up and deposit a hundred dollars into your trading account you can get five free shares of stock and if you deposit a thousand dollars you can get 15 free shares of stock check out my referral link down in the video description below first let's talk about products we all use a lot of it most people would have bought it brand new from a store or you might have bought it used maybe you bought it at a thrift store maybe you got it on Facebook Marketplace Craigslist or maybe it's even a hand-me-down So based on where you get it from this is how much you would have spent on it right used is a bit cheaper and if you get it for free it's free you also want to consider how long you're going to use it if you bought something for thousands of dollars and you use it only for one month and then toss it aside then it's not very Capital efficient being Capital efficient you would take that product if you know you're not going to use it and you sell it maybe you would have taken a loss and oftentimes in my own personal dealings with just using products and selling them out sometimes I even make money after using it for many years or you can think of the product as something you bought you used it for like 10 plus years you essentially used up the entire value of the product itself if it ever breaks you fix it with minimal cost and this is very Capital efficient so the whole idea is to buy things for as little as possible sell it as soon as you know you're not going to use it for a very long time to recuperate the cost from it and the difference between how much you sell it for and how much you buy it for would be either a profit or a loss so I want you guys to think about every single product that you own it's something that you're bringing into your life maybe permanently but oftentimes very temporarily you use it you take care of it and eventually it's time to let go and I like to think of this more like a life rental when you buy something you're not actually paying the entire list price of the item because if you eventually sell it the difference there is the rental cost even if you you know use it for like 10 years then you can divide it by 10 and go okay every single year it cost me ten dollars a year to use this thing name brand things I'm not talking about luxury brands or anything just things that have a brand name they tend to keep value a little bit better than no brand name at all right like you know on Amazon there's a lot of those where you can't even pronounce the name those things drop in value greatly so sometimes when you buy a no-name brand thing you can think of it as you're buying it and as soon as you use it for the first time the entire residual value of the item goes to zero because you can no longer sell it with that in mind though you might be more prone to buying something not the cheapest of the cheapest you might buy something that has a brand so that it'll keep its value Capital efficiency flows over to what I eat also especially when going out to eat when you live around a certain area for long enough you tend to have eaten almost everything in the area and then things start getting boring in the Bay Area most restaurants are really really high price the quality isn't that good if you want good quality well you end up having to pay a very very high price and for me that usually isn't really worth the cost that's not to say that I don't go out at all I just go out more minimally than if I were traveling where I feel like the value to price ratio it's a lot higher as an example let me talk about Kobe beef it's a very very expensive beef if you go to Las Vegas it's gonna cost you about three hundred dollars for I don't know three ounce just one meal you can actually go to Kobe Japan eat almost an identical thing for like a hundred dollars or less why is it more expensive in the states is because they have to import it and by the time they import it not many people sell it and there's a huge Market if you're craving for Kobe beef yeah you're gonna have to pay 300 but if you can go to Kobe which will cost you a lot to go there but if you like going to Japan you know you can just wait until you get there before having your Kobe beef and you can get a lot better value if you buy it there I was just thinking about my past purchases and I just realized that I have never financed anything other than the mortgage I guess I paid some interest into my student loan so that was thousands of dollars let that sink in it just means that I never Finance anything I'm not paying other people interest when you're paying interest that money goes into someone else's pocket they lent you the money and they're collecting interest on this now the ultimate in capital efficiency is if you buy something you actually get a return turn on it it pays for itself and then it starts paying you back whenever I recognize something that's going to pay me back in a reasonable amount of time I just jump on it even if it costs like hundreds of dollars I'll just be like okay buy it right now a Tesla is not exactly gonna pay you back it's not gonna pay for itself but in my experience it has saved me probably like two thousand dollars every single year so if you're going to drive it for like 10 years well that's like 20 000 off the sticker price Tesla has reinstated the referral program when you buy a Tesla so check out my referral link down in the video description below and if you buy a model 3 you can get points which then you can exchange for super charging miles 500 of them I have a small scale do-it-yourself solar which it costs about like three four hundred dollars and I estimated that it's already paid me back the return on investment was around three years and I've had it for longer than three years now so those kind of things yes it cost me some money to buy initially but after owning it for a while it starts just saving me money on an ongoing basis going forward work equipment is something that can pay yourself back immensely but it's not quite transparent how it does it but when you get really Quality Equipment it just makes you work much better much faster it's important to look at where your money goes in your daily expenses for example let's say you go out for coffee all the time I hate to use this example because it's so beaten to death but you can get better quality than Starbucks coffee if you buy some Boutique brand coffee beans and make your coffee at home now you got to learn how to make a latte at home you gotta buy the machine you go go buy the beans but by the time that you're done let's say it's four dollars per coffee and you drink one every day you can make the cost of the coffee machine back within like a year or two so think of it this way if you do something a lot and you're spending a lot of money into it maybe you might not be able to replace it completely because maybe the version that you make at home is not as good but at least if you make some version of it and then you just have it at home you might not go out to have that outside as much take Shabu Shabu for example I think maybe not a lot of people know what it is it's basically sliced meat and you dip it into plain water with like seaweed inside and then you dip it in a sesame sauce it's a Japanese thing but I love eating Shabu Shabu and back in college I like to eat it like once a week or so so I decided hey let me get a meat slicing machine and try to duplicate some of that at home so in my previous meat slicing short video some people did not understand how it saves money pricing of your meat might differ depending on where you live in the Bay Area if you buy slice rib eye it costs 23.99 for USDA choice for a New York steak it costs 7.99 a pound when it's not sliced so if you just buy this bring it at home and slice it yourself and let's say it's just one pound you save 16 right there and I'm a habitual Shabu Shabu eat it I eat it like once a week so for a 380 dollar machine they're a lot cheaper ones I started off with a hundred dollar machine and because it saved me so much I'm like hey let me buy a nicer one because it saves me so much money so quickly I can afford to buy a nicer machine if you eat it only two times a month the savings alone can pay for the machine within one year which is incredibly short some people have commented that you can ask your butcher to slice your meat thinly for you if anyone has an experience of habitually asking their butcher let's say every other week of slicing shabu-shabu meat for them from a rib eye steak please let me know down in the comments section below and let me know which grocery store and where I hope this video helps you guys retire early being super duper Capital efficient it's more about making the most out of whatever money that you earn whichever profession that you have who wouldn't want to get more for their efforts then thanks for watching this video don't forget to give me a like And subscribe for more [Music] foreign [Music]

Channel: BeatTheBush

Views: 7,347

Keywords: personal finance, financial independence, FIRE, beatthebush, beat the bush, capital efficient, capital efficency, how to be smart with money, smart with money, more bang for the buck

Id: XV4Cl1xdR4g

Length: 9min 49sec (589 seconds)

Published: Tue May 16 2023