I hope your crop and harvest are moving along. It has been a challenging year to say the least. From time to time, editor Lyndsey would like me to write about stuff other than stocks so today I will write about some of the skills I learned over the years that helped me get to where I am today. Because I learned new skills I saved a lot of money on fixing cars and doing repairs around the house and yard which helped me build equity that I can now use to make money and teach people how to do so, too.
When I left home at age 16 or so I knew little about fixing things, carpentry or investments. That’s just the way it was. Now I know a lot about fixing old cars (a nearly obsolete skill now), carpentry and investing. I now use carpentry as a hobby of sorts because it makes me work with my hands after hours of working with my head. Sometimes I use my head in carpentry and I certainly did with my old cars, but it’s not the same kind of head work as working with stocks or writing articles or teaching how to sell covered calls.
I’m not independently wealthy, but we’re doing well. We didn’t start out this way, of course. I started out like most, with no financial knowledge and no money. But I learned stuff along the way that has helped me save and make money. I attribute my accumulation of assets and knowledge to two things: learning to do my own home repair and improvements; and building my financial know-how.
Learning how to work with wood, drywall, paint, and repair stuff around the house saved us countless dollars. I had a good teacher by the name of Albert Steinert, and together we designed and built our house in Dominion City, Man. It was his 23rd house and my first one. From that education I have done thousands of dollars’ worth of remodelling and repairs around our house and helped many friends and neighbours with theirs.
I drywalled the inside of our house in Winnipeg, super insulated parts of it and built a great room on the third floor of our house when our five children needed more space. I put up most of the drywall in the early 1980s, and you still can’t see the joints and there are no cracks in the ceiling or walls. I accomplished this by screwing one-by- twos horizontally on the walls and ceiling and then screwing the drywall to the wood so it could flex a bit without cracking.
As for painting drywall, my brother taught me to create slurry when applying primer. The recipe was one gallon of latex primer, one pound of dry gyprock joint filler and one gallon of water. Stir well (or let sit over night, then stir right before painting).
Because Albert taught me, I had the confidence to build a garage, install an air conditioner when that was still allowed, pour sidewalks and build fences and decks.
Just these past two summers I have recycled cedar boards into good-looking fences. That cedar would cost a lot of money new. Sure, I wore out a $250 sander the past 10 years but it has worked hard at saving me money. Plus, it got me working with my hands which I enjoy after hours of working with my head.
Again this doesn’t sound like much, but over the past 35 years I likely saved from $2,000 a year and as much as $10,000 some years with this skill. The money we saved went to trips to Disney Land, charities, private schools and money for RRSPs. Also, I didn’t have to pay GST on my own repair work.
DIY INCOME TAX
Another skill that has served me well is doing my own and other’s income tax. I don’t have a whole bunch of clients because I don’t want the tax business to be a career, but over the last 36 years I figure that little business brought in close to $200,000. Sure, I paid some income tax on that money because I declare all income, but the business allowed me to buy computers and use part of them for a business expense.
Because I did income tax I had to learn the ins and outs of the tax system which then allowed me to write about these things in Grainewsand the many chats I had with readers helped me learn more. The tax business also led me to (or forced me) learn all about farm income programs, such as the CAIS program (also known by other choice names too polite for print).
HELP FOR OLD CARS
My nursing of old cars back to life is a bit of a joke in the family, but so what. I asked a fellow worker one day why he would put $25,000 in a bucket and leave it out in the rain and sun and snow. He looked at me funny and I said, “That’s what you’re doing when you buy a new car, drive it on salty roads and park it outside at work and at home.” I think shortly after that he started to rebuild Mustangs which may or may not have dropped the cost of owning cars.
In my case, somewhere in the early 1990s I did an article with a farmer down near the border between Tolstoi and Emerson, Man. The guy had about 20 elderly John Deere tractors that he had acquired over the years. Some he used to farm with and some he used for parts, but the main thing was he learned how to take apart and rebuild JD tractors.
I decided to own two lines of cars: the big cars were GM, the little ones were mostly Datsuns. We have one Reliant that we got free. Other than that our cars have been GM or Datsun for almost 20 years. Yes, this skill is obsolete outside my own yard, but fixing cars has helped us save a lot of money over the years.
Many times when I had to change a starter or battery, or fix brakes in the middle of winter it was hard for people to understand that I was doing this for a long-term reason, not because I was cheap. I was cheap, of course, but there was more to it than that.
My old cars let me down twice in those 30 years or so. One was the clutch on the ’58 Chevy that spun out at Portage la Prairie. The other time was near Dominion City in the middle of winter after a mechanic at Canadian Tire installed new front tires on my ’66 Chevy half-ton and tightened the wheel bearings too much. That was a dangerous one.
I had a water pump go on me at Neepawa and a thermostat seize up in that town too. Because I knew what to do we stayed out of trouble and got to where we were going.
As for the Datsuns, I said a eulogy for the 1980 sedan after the car smacked a concrete planter on Pembina Highway. All told, that car cost us something like one-tenth of a cent per kilometre. And I still drive my pet, a 1979 hatchback with 120,000 km. It came from Haas Motors in Yorkton, Sask. I paid $600 for it in 2000 from the car’s second owner and it passed safety the first time. The other four have gone to their happy hunting ground.
I became known for having the oldest car in United Grain Growers but I wrote a lot of articles on how to fix rust and paint cars on the cheap which worked for many readers and saved them money too. We rented new Cadillacs, Lincolns and Buicks when we left town. That was part of the program. But I added up the cost of our cars, major repairs and rentals over the years and I think we spent around $40,000 since 1961. I notice that most of our kids don’t drive new cars and still fix their own when they can.
How much has fixing cars saved me? Hundreds of thousands of dollars. Now some people are too proud to do such a thing, or don’t have the skill or willingness to learn. But if I had to do it over I likely would, except the skill to repair cars is a lot more complicated now. Maybe impossible for most of us to learn and do.
But it sure worked then. And yes, I could do this because we lived in a city. If my wife was driving on the highway every day going to a job or with kids, I’m quite sure my vehicles would have cost a lot more than what we spent. If I had a crew of hired men or women working for me, I likely would have had to spend more money on vehicles. Some judgment required, as they say.
The last skill I want to write about is learning how to make money with stocks. I started out in life with no money, skill or knowledge on the topic. It took a while for the magic of compound interest to grow the money and for the magic of compound knowledge to grow the skill of investing. We also had five children, one paycheque and I had a busy job where 45 or 50 hours a week was more likely than 35, with no overtime pay. But we did have the joy of making over 10 per cent on our meagre savings, so the money grew.
Little by little my knowledge grew too, but it did get sidetracked from time to time because no one volunteered to be my mentor like I can be now. We went through several strategies: buy new, buy and hold, buy value stocks, buy momentum stocks and maybe more. All might work, but an investor could do a lot better if he could pinpoint when the market changed enough to warrant changing strategies.
In early 2003, BMO InvestorLine invited me to two seminars on selling covered calls. I took one person with me. I should have taken 10. If I had taken 10 I’m sure two or three would have caught on sooner than I and we would have had a chat group. Instead, I was on my own here in Winnipeg and in fact some readers tried to discourage me from learning and writing about this skill inGrainews.
Once I got going, information did seem to come from various sources but still many wanted me to buy expensive newsletters and wanted to make me a dependant. I wanted to be independent so I had to learn enough to think instead of wonder.
After I retired fromGrainewsI had more time to study and think. Now I believe I have a working knowledge on how to make money with stocks and selling covered calls. The strategy helped me beat the bear in 2008; our portfolio just kept chugging along in 2009. Now we can almost make cash money at will, when we want to, not when the market wants us to.
This is a very rare strategy in Canada. It is more popular in the U. S., but slowly some financial people are getting more and more involved with selling covered calls.
Of all the strategies I have learned, I think this is going to be the big one. The others had their time and place but some will become or have become obsolete, and at some point I won’t be able to pull wrenches or run a belt sander. But as long as I can see and think a bit I believe I can run our portfolio of stocks.
We now know enough about calls and puts that we can take a stock like Bank of Nova Scotia and make it earn us money four different ways. We can manage the strategy to make more or at least stay even in a bad market, make money in flat markets and let stocks run in bull markets. Most investors rely on capital gain and some dividends for their gains. We take capital gain when we can, we take dividends as they come but then we go out and find renters for our shares who pay us cash money for the right to buy our shares sometime in the future at a price we choose. That rental income is called a premium from a strategy called selling covered calls.
CHICKENS, COWS AND PIGS
I spoke with a farmer the other day who told me they keep a milk cow or two and that saves them a lot of money. Round that out with a few hundred chicks, a pig or two and almost any farm family can save a lot of money on the more expensive foods most people eat. Throw in a garden, and a family can save many trips to town and save on the food bill. None of these are free and all take work but the skill of raising at least some of your own food can cut cash costs considerably over the years.
The long and the short of it is, don’t be afraid to learn new skills. Learn on your own or take a course, read, or take lessons from someone who knows what you want to learn. But learn. Learning how to make money with stocks is one of the legs on my financial plan that I call the five-legged stool. I have an essay on the five-legged stool and also how and why I sell covered calls. If you want them send me an email at [email protected]
Andyismostlyretired.Hemanageshisown portfolio,playswithgrandchildren,runsa gardenortwo,fixescarsandlikescarpentry. Healsopublishesanewslettercalled StocksTalkwherehetellswhathedoes withhisstocksandwhy.Ifyouwanttoread itfreeforamonthjustgotoGoogle,typein StocksTalk.net, lookforfreemonth,click,go toform,filloutfourlinesandclicksubmit.