I took a bit of a blogging hiatus this summer to focus on motorhome vacations with my family. That time was also spent reflecting on life, what true wealth is and how to build it. Anyway, now I am back to writing. This week I explore building holistic wealth via what occupied my time for the last few weeks – DIY house maintenance.
Some of you may recall that I previously shared one of my biggest financial mistakes – my dirty little 10000 sqft secret. While the cash-flow aspects of our big house are not a problem, it is a good example of how spending excessively causes other problems. One of those is that it is often hard to find people that are willing or able to do maintenance on a large or complex house. Many tradespeople are looking for quick/easy jobs that they can “getterdone” and move on. It maximizes profit. Those who are willing to take on a challenge, charge a premium. They know that they’ve got you. Plus, they figure that, since you have a big house – you can obviously afford it.
For example, we hired a painter to do two straight-forward bedrooms. It took him two days and cost us a couple of thousand dollars. About $100/h after materials. I thought that this must have been a crazy outlier. However, I have heard of many similar rates from other colleagues since. Was that good value for the money?
First, consider what the after-tax value of your time is.
I previously used changing your tires as an example of how to think about the value of your time when considering a DIY job. That was a good exercise to mathematically examine the cost and savings from using your time and effort instead of outsourcing.
Basically, you need to consider how much you make per hour after-tax. When considering the income tax, if you don’t need to work extra to cover the cost of hiring, then use your average tax rate. If you would need to work extra to pay for it, then use your top personal marginal tax rate. Due to our progressive taxation system, your time spent earning money becomes marginally less valuable as you work more. Motivating, isn’t it?
When hiring, also consider the time/effort spent managing the workers.
That could be a minimal amount of time if you deal with an established professional who values their reputation. Or someone who is skilled, but also hungry to build their business and garner that reputation.
This aspect has honestly been an area of constant disappointment for me when hiring tradespeople to do jobs around our house. The tight housing-related labour market means an abundance of work.
Sometimes, that translates into a business-model of getting things “mostly done” as quickly as possible, collecting most of the payment, and then moving on to the next job. Unfortunately, I have had to spend extra time and accrued frustration dealing with partially completed or shoddily done jobs.
Factor the important subjective non-monetary modifiers into the equation.
One is the danger factor. That includes both injury to oneself in the process of the job or to everyone if you make a mistake resulting in catastrophic failure. I don’t do any complex electrical work beyond light switches and outlets for this reason.
The other is the gross factor. How much you really detest doing the job.
Sometimes you have little choice.
After the bedroom-painting-heist, I swore to never hire a painter again. Eight years later, the external woodwork near the roof-line of my house needed to be restained and sealed. The neurosurgical height of the work area and my disdain for staining got the better of me. I tried to hire someone.
No luck. Once I sent pictures of the job, only one painting company even wrote me back. With winter approaching, I decided to take it on. Reflecting on it, I actually think it was a wealth-building experience.
DIY maintenance can help build other aspects of your holistic wealth.
I won’t torture you with the mathematics of it, but from a financial capital perspective, doing this job myself paid similarly to my physician job when taxes and time are accounted for. What I do want to highlight is how doing this job grew my wealth in other ways: particularly the human capital dimension.
#1 The Health Benefits & Potential Pitfalls
Our human capital is our ability to work and our health is integral to that. Dr. Latestart’s financial wisdom from his real-life story and experience highlighted that.
Most DIY home maintenance incorporates natural movement. Walking, lifting, bending, reaching, groaning. This type of physical activity is vital to longevity. One of the common themes in the “Blue Zones” (where there are a disproportionately more healthy people living to over 100 years than you’d expect) is that they don’t “intensely exercise”. They just have physical activity as a natural part of their lives. So, home maintenance can contribute to this.
The potential pitfall is injury from home maintenance. Be sure to use the right tool for the job. Also, take the time to learn how to use it safely – usually not difficult with a combination of talking to the folks at the rental shop, the internet, and some common sense. Getting and learning to use the right tool often costs more upfront. However, it will make the job easier and save you time overall (the whole point of exchanging money).
Importantly, you are less likely to injure yourself than if you are doing weird things or exerting yourself in strange ways to make a sub-optimal tool “work”. An injury can cost you dearly in terms of human capital. On the other side, a machine removes some of the benefits of moving naturally. However, some jobs are just better with some horsepower.
For my staining job, I combined the right tool and horsepower and rented a 4X4 Genie to provide a comfortable and reasonably safe platform. It cost me a couple of thousand dollars for the week. However, it also saved me way more than that in the after-tax value of my time by making the job way quicker than building scaffolding or moving ladders around. I also avoided downtime, neurosurgery, and a body cast.
#2 Building Relationships With Friends & Neighbours
The other opportunity that arises when you rent some heavy machinery for a project is that you can share the rental. My neighbor was able to use the Genie to do some repairs on his barn roof. He returns the favor when he has jobs going on.
For example, he also found someone to come and re-tar the recycled asphalt on our driveways. This is much more economical and environmentally friendly than regular asphalt or concrete. Plus, I got to drive the rental steamroller. How cool is that!?!
Building this type of relationship with others in your community builds up the human capital that you can draw upon. Our enclave of neighbours have helped each other out for years. I have given shots, checked on loved ones in the hospital, and mucked out barns (with a tractor). They have pulled me out of the ditch more than one, fixed machines I have buggered up, and we have even built a professional quality treehouse together.
Another one of the “Blue Zone” themes for those who live long and healthy lives was fortuitously that they drink some kind of alcoholic beverage regularly. Now, before you dutifully pursue this “health tip”, it is actually more likely the social aspect surrounding the beverage ritual than the beverage that is beneficial. The sense of relaxed comradery that permeates “having a cold one after a job well-done” feeds the relationships and stress reduction that charges your human capital.
#3 Learn New Skills, Create, Impress Your Spouse
Our skills are part of our human capital. They help determine how much money we can command when we sell our time. I am unlikely to ever sell my paving or painting skills. However, I still find that they add to my human capital. Part of having a well-balanced life is to have the mental stimulation of learning new things. Tackling a job at home gives me the opportunity to do that. It can also be a great outlet for creativity and you can create things that you are proud of.
Sometimes, you can even get the job done the way that you envision it rather than what the service provider “just does”. When we built our house, I wanted the garage doors to have a faux wood look to tie in with the other real wood features of the house. Their version of that was to buy a metal garage door stamped with a wood-grain texture and then paint it. It has always bothered me as an eyesore. Motivated by my staining frenzy, I finally re-did these doors the way that I had envisioned them. They now look like real wood with all of the nuances of variation in tone, colour, and grain that shifts with different lighting.
I painted a red-tinged base coat, then darkened the areas that would take up more stain (if it were wood), then tinted it all with a thin coat of a brown gel-stain. To protect it, I topped it off with some spar urethane tinted with some of the stain used for the wood features of the house. It gave a great multi-toned wood look that ties in with our real wood features. Even my wife (who is afraid to feed my ego and make me insufferable) complimented it.
#4 Model All of the Above Benefits For Your Kids & More
Our main goals as parents are to raise our kids to be happy and productive adults. By taking on some of these life-tasks, we are not only modeling frugal financial behavior. We are demonstrating how physical activity, mental stimulation, and building community works in real-time. These are key to a long, happy, and productive life.
A key characteristic that also underpins that goal is resilience. The ability to push through the difficulties that life will throw at you. They have seen my DIY successes, fails, and how I have corrected them on the second attempt. Besides modeling this, developing resilience entails building a sense of competence. Kids can have an opportunity to develop that life-competence by helping with these types of tasks around the house. From laundry to home-renos. Of course, with renos we do also need to keep the safety factor in mind. I shudder at the thought of my kids driving the steam-roller. So, do the squirrels collecting walnuts off of our driveway.