Monday, January 14, 2013

Motors and motivation

I cannot tell you how many times I took apart a motor and most of the time they never went back together.  Over the years there were plenty of lawn mowers, engines, old farm equipment and implements that just wore out and needed replaced.  Dad allowed me to take them apart as long as I would sort out the parts into Folgers Coffee cans so if he ever needed a part he would know where to look.  Big parts were either in galvanized tanks or piled but in dad's mind it was required there was order to junk.

We had a huge junk pile hidden behind the barns so no one could see it.  It was filled with cool stuff.  In fact it was always a sad day for me when dad would call this guy from Ark City to come down and buy the old junk for recycling.  We had a couple of big galvanized water tanks where we had lots of smaller parts and then along side of those were the old machinery where we would rob parts to repair newer equipment.  One thing dad and most farmers were able to do and that was repair about anything broken.  They did it without driving to town unless absolutely necessary.  Even though gasoline costs 15 to 17 cents a gallon mom and dad knew it was expensive to drive to town plus they knew if they were driving to town there was opportunity costs.  Now that may be a strange term to you but let me explain.

This is actually something I talk to folks about everyday as a financial planner, opportunity costs.  Let me make it simple.  If you spend your time driving to town you cannot accomplish a task like plowing the field.  Another way of saying it is if you have a house with a mortgage on it and you pay 3.5% interest you feel pretty good.  But if you pay off the mortgage you feel great.  Kinda like to accomplish a great thing.  However the equity (value in the house) is now earning you ZERO.  You may disagree because the house is increasing in value but I hear this every day.  I propose to you that the house goes up in value every day whether you pay down the mortgage or not.  The fact is if you finance it by paying off the mortgage you are financing it yourself.  Think about it, if you invested the same money in a long term investment that you can get access to any day and you earn 5 or 6 % on it you would be way ahead in the 30 years of financing your house.  I dare you to do the math.  If you don't get it call me and I will show you.  That is lost opportunity cost.  

Anyway, back to the junk yard.  I spent lots and lots of hours out there looking for parts to create a new toy or as I got older to repair a piece of farm equipment.  My dad use to laugh when we had to take something and adapt it to repair something.  He called this farm engineering.  I dare to say that farm boys can look at problems and think up solutions better than most.  One of my favorite success stories is told about my cousin, Jon Tanny Olsen.  He told me one time, "I just figured if I could do something faster and cheaper than anyone else I could make a lot of money."  He did and it did not take a PHD in engineering or a psychology degree or an understanding of all that BS they insist on you learning in college.  Don't get me wrong education is a vital part of success but I am saying that a little common sense can make a lot of cents in the long run.  Get it?

So what do you learn in the Osage?
  • One man junk is another man's treasure
  • Junk ain't junk if someone else will pay you for it
  • Learning to think starts early on the farm - give a kid an engine to tare apart and he will make millions

Thanks for your time,

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