Source: http://www.pakwheels.com/blog/free-car-advisory-service-pakwheels-members/

Learning how to maintain a car can save lots of money over the long pull. In addition when a repair is needed that is outside your scope you will be in a much better position to make sure you’re treated fairly if you have some basic understanding of how cars work. With youtube you can find almost every repair you could do easily documented for review.

I started learning about cars as a young kid probably 5-6 or so. My grandfather was a mechanic and worked for a man named Smokey Yunick on some of the first cars that were raced on Daytona Beach and what was the predecessor of NASCAR. I remember him explaining the concepts of engine/transmission operation and combustion cycles. I absorbed a lot from him, but really had no interest in cars until much later. I took a course in high school which was a shop class where we fixed the cars of teachers and students. Probably the most useful and practical course I took. From that basis I taught myself repair from simple maintenance up and to the point of being able to swap out or rebuild engines and some simple fabrication with MIG welding.

The basics of engine operation are fairly simple. The modern car engine runs off a 4 cycle system. Intake, Compression,  Power and Exhaust strokes. Intake is where fresh air and fuel are sucked into the engine (in a specific ratio) as the piston moves down. In the next movement the piston goes up and compresses the mixture. Once compressed the spark plug fires igniting the mixture and pushing the piston down (this is where the horsepower is actually generated). Finally the piston moves up again from inertia and pushes out the old air and is ready for the next intake cycle. To run a engine needs fuel/air in the correct ratio(usually not a problem in fuel injected engines), spark(adequate strength), and compression (no leaking gaskets or piston rings).

Source: http://en.wikipedia.org/wiki/Four-stroke_engine

To start the journey I would recommend getting the repair manual for your car and learn the following:

1. Brake Pad and Rotor Replacement (both disc and drum).
2. Oil Change and Filter
3. Cabin and Engine Air Filter Change
4. Transmission Fluid Change
5. Radiator Coolant Flush and Change
6. Learning how to change a Battery

Learning these things will save you some serious money, for example we took my brothers car in for inspection and it needed new brakes. They quoted us a price of 600 dollars. I was able to do the job in 2 hrs (at a leisurely pace) with about 100 dollars in parts, effectively paying myself 250/hr. If you have more then one car this is multiplied (I have 3 that I’m responsible for the maintenance). Another job that perpetually saves money is oil changes, takes about 10-15 minutes and if you use synthetic oil like I do you will save 30-40 dollars every time by doing it yourself.

I’m not going to create a step by step for how to do this stuff as it’s widely available elsewhere and there are small variations based on make and model. These jobs can be accomplished with simple hand tools for the most part.

The next time you need one of these repairs done give it a shot yourself first. Worst case if you find that the job is to much put it back together and drive it to a shop. By learning and practicing this stuff you can save some money, which will compound and allow you to reach retirement that much sooner.

————————————————————————————————————————————————————

Warning more info then you probably care about:
*An aside about the gas blends available at the station. Have you ever wondered about the differences in octane and why to choose one or the other

? 87 vs 91 vs 93. Well here is the simple explanation. Octane is a fuel stabilizer, it prevents premature explosion of the fuel under pressure. Most car engines are designed to run on 87 octane. By designed I mean specifically the compression ratio which is a proxy for how much pressure is generated in the engine prior to combustion (most cars are between 8 and 10 to 1). Some engines particularly the ones in luxury cars use higher compression ratios (between 11-13 to 1), if this is the case the engine needs a higher octane fuel to prevent something called detonation. Detonation is where the air/fuel mixture explodes prematurely and it can harm the engine. It happens because as air is compressed it heats up (the air molecules hit each other more frequently and generate a kind of friction).More importantly, Changing the octane of the fuel does not change the power output of the engine. Meaning if you drive a honda civic your wasting your money by using a higher octane fuel or octane boost from the auto parts store. Race cars particullary ones that are super or turbo charged will use very high octane fuel 100 or higher to combat detonation. But again detonation is a consequence of using higher pressure in the engine, using high octane fuel in a normal compression ratio engine is a waste.

Reading this it turns out it wasn’t as simple an explanation as I thought hence the warning, but at least we were able to avoid the organic chemistry behind octane, maybe another time.

Learning to cut your own hair, for fun and profit. I got the inspiration for this first from a friend who has been doing it for 10 years, I never knew although I am fairly oblivious to fashion. Also I remember from my childhood an uncle who always did this, my parents made fun of him, and gladly paid 15$/person for haircuts. I used to be in the same camp, but my way of thinking has changed. Where we live now haircuts are about 20/person with tip. Myself and my son need a haircut about once a month. My brother also gets one about once a month. Together this is 60/month or 720/year or 7200 over 10 years, add in compound interest and we are probably forgoing 10-15,000 dollars on haircuts alone over the next decade.

Given all that I decided to try an experiment. The steps are as follows. 1. buy a set of clippers, I found a set on Amazon for around 30 dollars made by Wahl, that was fairly well reviewed. 2. Watch some videos on Youtube on how to do self haircuts, for men it’s fairly simple. 3. Try it out, have a broom ready to sweep up afterwards.

The results were not bad, I have given myself a total of 2 haircuts so far (40$), and my son one (20$) so the clippers have paid for themselves. Now its obviously not pro-quality haircuts, maybe I would make an exception for picture day or something but for most intents an purposes the quality is reasonable. My wife and daughter will still be going to the salon, but I feel I have made at least a dent in some unnecessary spending. I will be doing this from now on and invest the savings. I will be looking for other DIY things where I can have a larger impact on spending.

Link to the clippers we used. 

I was watching an episode of Shark Tank last night and started to wonder how the show would be different with different “Sharks”.

Last night I was trying to imagine knowing what I know about Buffett, most of which comes from his biographies and shareholder letters, how he would react to the business pitches. Buffet has three main principles he applies to investment. One of his first principles is stay inside your circle of competence, I imagine he would be passing on the vast majority of the proposals. Some of the Sharks seem to be willing to take a swing at almost any pitch, except for the truly ridiculous. The problem with this is that there are unforeseen problems with the various businesses that you will have no way to anticipate if you are unfamiliar. You can see this in how some of the sharks will pass on businesses that they would have previously invested in, because of past negative experiences (i.e they lost money). One way to avoid losing money is to refuse to participate in investments where you do not have a deep understanding of the risks and how the company makes money.

In particular on the shows I have seen, most of the sharks seem to love the branded consumables (chips,pretzels, cookies, peanuts, peanut-butter etc.) The problem with these businesses is that they truly have very little competitive advantage (another Buffet principle), which is sometimes mentioned on the show, but infrequently. What I mean in this case by lack of competitive advantage is that basically anyone can create another branded consumable and market it. The problem with not having a competitive advantage is that, in financial speak your returns will equal your cost of capital over time (the returns you have to promise or are expected to entice investment). What that means is that every dollar you invest or someone else invests into the business will increase the value of the business 1$, so you are not really getting anything for those extra dollars over time. The reason for this is competition and unless you are investing on terms which greatly undervalue the business your better off spending the money elsewhere.

The last Buffett principle is buy with a margin of safety and it’s hard to tell if the Sharks are doing this or not, because many of these businesses have not earned a profit. The margin of safety principle states that you want a buffer between what you pay and the value of the business. This is to protect against unforeseen business downturns or various problems and hopefully limit or eliminate the chance of major loss. It’s difficult to value a business that has not yet earned a profit, or that has only been in business for a few years. The range of possibilities is so large that even assuming Buffett found a company on the show that met the first two tests, this last one would probably kill the deal. This is because to invest where the range of possibilities includes losing all of your money(if you were willing to take that risk) means a very large discount upfront, probably one that most entrepreneurs would be uncomfortable with.

In summary the three principles that Buffett often talks about are 1. Circle of competence (staying inside it) 2. Durable competitive advantage and 3. Buying with a margin of safety. If he were on Shark Tank I think there would be much less activity and probably hundreds of pitches before he swung as it’s difficult to pass all three tests. This would be more profitable for him, but not make for such great T.V.