False Economy

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I frequently run up against what seems to me to be false economy when talking to people.  Some specific examples of this include:

I have been told that it is actually costing me MORE to build my house than it would have cost to buy it (on credit, with a mortgage) because I should count my time as an expense at my former rate of salary.  Apparently being debt free is valueless in today's society.  Or maybe its today's society that's valueless ... LOL!

I've been told its more expensive to buy and keep a cow than it would be to buy milk from the grocery.  Let's look at this rationally.  Bear with me while I run through the ACTUAL figures (or at least close estimates) for my household.

We can easily go through 2 gallons of milk a day, just drinking it.  But let's be conservative and call it 10 gallons a week (rather than 14).  OK, a gallon of milk at the grocery is about $3.  That's $30 a week for milk, $1560 per year.

Now, let's look at the cost of a cow.  That ranges from $800 to $1500 around here.  Since I don't want the top-of-the-line production model lets call it an even $1k, onetime only expense, for purchasing a Jersey milk cow, freshened and with a calf (probably a bull calf).

Vet bills for said cow, call it $100.  Feed for said cow will be negligible since I have 8 or 9 acres of pasture that nobody's eating right now - don't think she's likely to go hungry, and I don't think I'll have any trouble keeping her in hay through the winter since winters aren't typically much down here.  Call it $300 to $500 to buy in hay and grain per year (and I think that's a high estimate, I know folks around here who don't buy in anything but enough grain to get her to come in for milking, but let's assume my novice status would force me to buy some in).

So so far we have a first year output of $1k for the initial purchase; $100 in vet bills; and an estimate (let's take the high road) of $500 for feed.  Total of $1600 investment in the cow for the first year.

AHA!  Sez the naysayers, See, that's FORTY DOLLARS MORE THAN IF YOU JUST BUY THE MILK!  And anyway, you just drink too much milk.  Don't you know its BAD for you?  (They mumble around a mouthful of Big Mac washed down
by a swig of Coke)

Oh, but we're not done yet, not by a long shot.

First there's that bull calf.  Jersey meat is pretty darn good, I may just put him in my freezer.  Now if I do that I can't even BEGIN to guess the retail value of all that meat.  But I'm not going to do that because I frankly couldn't possibly go through that much meat all by myself (my son doesn't eat beef, and I don't eat it much).  SO let's say I sell it.  And I'm not even going to assume a direct marketing approach here, let's say I sell it at auction.  Calves sold in the fall around here go for $400 to $600, but this is a Jersey steer and the price it will bring is lower because its a dairy breed.  Let's call it $300.

OK, now my total is down to $1300, first year's investment.  BUT we're not done yet.  There's that Angus calf I bought and put on the cow.  He cost me $100 and I guarantee you I'm getting $600 when I sell him (well as much as you can guarantee livestock prices, but these are typical estimates for around here).  Let's be conservative and say I only get $400 for him.  There's another $300 net, bringing my total expense so far down to $1000.

Hey, the grousers holler, that's not fair!  You're ignoring the cost of FENCING!  And you should include the cost of your TIME!!!

OK, ok.  I'll give you the fencing, even though I would have to fence most of this anyway just to keep my dogs in.  Now if I were putting up chainlink fence to keep my dogs in, which costs a lot more than the fence I will be putting up, these folks wouldn't bat an eyelash, but fencing for livestock - THAT'S an unreasonable expense.  LOL!

But I draw the line at charging for my time.  That's ridiculous and its one of the cornerstones of false economy.

But I digress.  The fencing.  I estimated materials recently at $2k.  Let's call it $2500 to be on the safe side.  I'll have to hire someone to power drive the posts, I have no clue what that will cost but (to take a leaf from the yuppy bean counters I used to work with) I'll pull a figure out of my a... err, that is, out of the air, and call it $500 for hired labor to do that.  So lets call it $3000 to get my fence up.  OK, taking another leaf from the yuppy bean counters, I'll even add 1/3rd of this amount for unforseen and overlooked expenses (and in case I'm wrong about any of my estimates).  Let's call the fencing in at $4k.

Heck, lets be REAL generous and throw in an extra $1k on top of that for tools and whatnot I don't have that I might need to get this totally installed.  So now we're assuming my fence is going to cost me $5k (pretty high for the amount of fence we're talking, but let's be conservative).

Aha, now the faces grow smug again.  You're now spending $6000 for your 520 gallons of milk!

Errr, no, actually, I'm not.  Taking yet another leaf from the yuppy bean counters, let's AMORTIZE the expense of that fence.  The fence I'm putting up (Premiere's top of the line stuff) is expected to last 30 years or longer.  In 30 years I'll be 72, and I don't expect to be milking a cow on a daily basis or herding sheep anymore by then.  But I might be.  In any case the fence is likely to outlast my need for it.  So that fence, on a yearly basis, will cost me aboooout ... $170 a year (rounding up).

I'm not going to get all silly on you and try to amortize the cow itself, though that's what the yuppy beancounters do.

So my first year expenses are up to $1170 so far.

ENOUGH WITH THE CHARGING FOR MY TIME BULL HOCKEY!  I refuse to even consider it.  As someone once said to me, "Time is not money.  Time is a magazine."  Time is intangible, limited, and infinitely more valuable than mere money.  Money cannot buy time, though you can waste a considerable amount of it in pursuit of money.  And I have, but no longer.

Now that's just the first year's expenses, and its less than the cost of the store bought milk (if you mention the "cost" of my time ONE MORE TIME I swear I'm going to poke you with a sharp stick!).

From now on, assuming yearly expenses of $100/year for vets, $170, for the fence, $500 for boughten in hay and grain, and heck, before somebody else can bring it up, lets throw in an estimate of $100 (amortized) per year for fence maintenance, it costs me $870 per year to keep that cow.  Let's call it $900 just to keep it simple (less than a monthly house payment for most of the yups I used to work with, but they would see that as a high expense).

Oh, but don't forget, there'll be two calves per year, one boughten Angus steer calf for market and one of her own.  If its a bull calf it won't be worth much, we'll call it $300.  And we'll assume the lowball estimate of $400 (net $300) for the angus steer calf in the fall.  So 520 gallons of milk is costing me $300 per year on an ongoing basis.

But wait!  That's still not accurate - because if I'm only getting 520 gallons of milk per year from that cow there's something REALLY REALLY wrong with her!  Production Jerseys average 6 gallons or better.  Let's say my cow, on pasture and not much grain (except when the calves are on her so there's some left for me) will give 4 gallons per day.  That's 1460 gallons of milk per year.  Not an unreasonable estimate for a Jersey milk cow.  Call it 800, to be conservative.  Eventually she'll have to be dried off and go out of production for awhile, though Jerseys can go as much as 18 months between freshenings - but then I wouldn't have the $300 calf (of course if its a heifer calf its worth a lot more than $300).

And wait again!  The milk I'm getting from her on a daily basis is MUCH better than the milk from the grocery.  It's 5% instead of 3.25% butterfat.  It is raw, fresh milk, untainted by the chemicals (including formaldehyde) and additives that are put into commercial milk.  It is chockfull of enzymes and vitamins and flavor.  The closest I can come to it in quality is raw milk from Young's Jersey Dairy in Ohio, and I think their milk is going for close to $5 a gallon now.  Clunk that back into our figures and the value of that 800 gallons of milk a year is ... $4000!  We're showing clear profit here!  And I don't even have to drive
to Ohio to get my natural, fresh, raw milk!

Then there's the cream, butter, and real buttermilk.  There's the hog and the chickens that get the extra milk I can't use, therefore reducing their feed costs and increasing their net worth.  There's the ice cream!  The CHEESES!  The fresh yogurt, and real sour creme!

And not least of all, there's the satisfaction and pleasure and sense of competence that comes from doing for one's self.  That, like time, is invaluable.

And invaluable is not the same thing at all as "valueless".  Not the same thing at all.

-- Sojourner (notime4@summer.spam), August 12, 2001


How about the time you wasted writing this epistle,and the time I wasted reading it ? I enjoyed it though, so give us some more . Big george

-- George Wilson (cwwhtw@aol.com), August 12, 2001.

If you enjoyed it - then it wasn't wasted. It was "invaluable", right? LOL!

-- Sojourner (notime4@summer.spam), August 12, 2001.

HEY! You forgot the biggest asset of all! All of the free fertilizer that cow will produce! It boggles the mind . . . :)

-- Jennifer L. (Northern NYS) (jlance@nospammail.com), August 12, 2001.

OH ... MY ... GOSH!

HOWEVER could I forget the value of ... (DAH DAH DAH)


-- Sojourner (notime4@summer.spam), August 12, 2001.

well,, if your a commmercail milk producer,, you would have to but ALOT more than that stuff,, Bean counters can make any number turn into their favor,, just like stats,, re word the questions,, and you get the stats you want

-- stan (sopal@net-port.com), August 12, 2001.

Soujourner--Don't forget to factor in the amount of money you will save by not having to go to the health spa for your exercise; say $1,200 a year, conservatively. Chasing that cow around the pasture is great exercise!! Packing hay, grain, and buckets of milk are great strength training. Oh, and let's not forget to factor in the cost of seeing a mental health professional, like the yuppies do. We can tell our troubles to our animals, at least they care about us!! It's all a matter of perscpective anyway. I can find lots of ways to justify my lifestyle.

-- (trigger@montana.net), August 12, 2001.

Sojourner, I'm affraid we're going to require you to go to our company shrink [$200 per week] Got to get rid of your nasty attitude..Dr A. Greeeenspand will bring you back into the almighty CORPORATE ways..He says it might take 3 years tho............[with tounge slightly in cheek].....Hey I could use a gallon a week......Jim

-- Jim-mi (hartalteng@voyager.net), August 12, 2001.

You mean ... kind of like this:

Squinkers comic strips for the week of July 30

-- Sojourner (notime4@summer.spam), August 13, 2001.

Sojourner, I don't have a cow, nor do I drink milk. However, I have bought one house, and built many houses.

As far as it being cheaper to buy a house than to build it, there is only one situation where I would agree with that:

If you are almost CERTAIN (I say almost, because nobody can be certain, expect maybe Alan Greenspan and his best friends) that there is going to be a great deal of inflation, and you can get a loan with a very low interest rate, you would likely come out ahead buying on time.

An example: I bought a house (the first and only one I ever BOUGHT), back in 1970. I only put down $1500, and the cost of the house was roughly $22,000. My house payments were very low (I can't even remember, it's been so long, but the interest rate was only 5 1/8%.

Three years later, I had to move, and sold the house for $33,500. So I made $11,000, m/l on an investment of only $1500, plus monthly payments which were, I think, about like rent would have been.

OK, you'll say, (and you'll be right), "but then you had to pay an equally inflated price for you NEXT house". But what if I had bought two or three houses? Then I'd have made a whole bunch of money by borrowing.

This only works, however, if there is a lot of inflation, and without a crystal ball, I don't recommend it. I've been very lucky, or prescient, or something, and HAVE made big $, every time I've bought and sold a house, land, etc.

On the other hand, I've built several houses, for cash, and have held onto them, and they are now my entire income, as rentals.

If you build yourself, assuming you are capable of doing so (and willing to ask lots of questions, and read lots of info if you are not capable) it's almost always a good investment of your time.



-- jumpoff joe (jumpoff@ecoweb.net), August 17, 2001.

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