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Paying for the Hobby!

by Hans Beerbaum Article and Photographs Copyright Hans Beerbaum, 2006

Hans Beerbaum is a financial planner and investment advisor who has been collecting for 40 years. Starting as a teenager, when German militaria was plentiful and cheap (German helmets with original paint, liners and chinstraps for $50), he built a significant collection of uniforms and equipment. The hobby went dormant for twenty years as Hans searched for a career and started a family (three kids, now teenagers). However, in 1990 he was told of a company that was selling German halftracks locally (OT-810s), and he found a way to buy one. The company even delivered it for free, a round trip of 160 miles. That was the start. There are now a Soviet tank, two halftracks, at least fifteen pieces of German and Soviet artillery, several trucks and miscellaneous vehicles, at least six demilled machine guns, and many, many repro German and Soviet uniforms. For more information and pictures, visit his website!

Reenacting, like everything else, costs money. From what I have seen over the last few years, being a Russian or a Brit was relatively cheap while being a German was clearly the most expensive.

Photograph Copyright Hans Beerbaum, 2006

Apparently, after the Band of Brothers TV series, there was a surge of interest in US uniforms which started out being expensive but became less so over time. Now that the Chinese have started producing German uniforms (and US), it should cost less. I noted with interest that when German assault gun uniforms in wool first came out, they cost around $700. Now, you can be an assault gunner for $150 or less. Of course, there is the cost of the assault gun, and that is what this article is about. For those of you who are not Germanophiles, an assault gun is also known as a Stug, and costs a quarter million dollars, plus the cost of restoring it. Stug is short for one of those charming German words: Sturmgeschutz. My German language teacher in Germany (a former Luftwaffe fighter pilot who shot down 11 US bombers and 2 Spitfires) liked to say: "German is easy: hand is hand, brown is braun, toast is toast, and top speed is hoechstgeschwindigkeit."

But I digress.

The question is how do you spend money on a hobby without taking money out of the mouths of your kids or denying them an Ipod or a new car which they need so badly? If you're like most Americans, you make a choice: If its a bike for the kids or a Moisin 91 for my impression, the Moisin wins. After all, the rational male mind will say (as I do), "When I die and my kids sell my collections, that Moisin 91 will be worth a lot more than I paid for it." By contrast, that kiddie bike will have been taken to the dump decades before. Of course, in the meantime, you have to deal with your wife who is not nearly so rational. A new set of cast iron frying pans will not only feed the kids but serve as a club when you get out of line. Women are good at multitasking.

I'm a financial planner. My job is to persuade people to save money for a rainy day, like retirement. The problem is how to both save for a rainy day and also pay for a hobby? The world of securities has recently created a tool that will allow you to do both, and that is described below. Let me say at the outset that I will not be giving you specific investment advice. The regulators put guys like me in out of business for giving specific advice on the internet, so I'm only going to describe the concept in general terms. If you have a financial advisor, give him or her a call and see if they'll do this for you.

The underlying principle is that once money is spent, it is gone. You save up to buy your Moisin (or Mauser, Garand, etc) and when you have the price, you buy it. You have the rifle but your money is gone. It is not available to put your kids through college or buy your wife that new set of cast iron cookware. The Franklin Mutual Fund company saw this happening all the time. People would invest their money and then cash in their shares when they had reached their goals. In order to keep those investment assets in the company, Franklin bought a bank and developed a loan program so that you could borrow against your shares but leave your investment intact. The impact of this approach is powerful and helps you to both have your Moisin and eat it too ("have your cake and eat it too").

Although this looks like the German 88 when its emplaced, its a 1931 Soviet 76.2mm AA gun. Because its Soviet, its cheap. It still has the problem of great weight and being difficult to manipulate. But, so is all heavy artillery.

Here is how it works: You save up as much money as you can, preferably through a systematic savings plan (e.g. $100/month) Over a period of time, your account grows. Let's suppose that it grows to $10,000. Depending on how much you invest, this could take a few years.

You can create a line of credit against that $10,000 for up to 60% of the total (that would be $6000). You can write checks against this account until you hit the $6000. You can use it up in a month or a few years, or not at all. The key is to create the pool of capital. $6000 might buy you a compete Russian impression and a motorcycle/sidecar so that you can get quickly around the battlefield. Or you could buy an artillery impression and a small cannon (you need to be looking for bargains!). You put a price tag on it, and I'll tell you how much you have to invest.

The rules: you have to pay quarterly, and at least pay the interest on the loan. Principal payments are not required but I recommend it. That way, you have paid the loan off over five years and you have both the money and the rifle. Actually, the results are better than that, so far. 20 months ago, I pledged $41,000 in shares to put my oldest through college. I got a $24,000 line of credit. It took 18 months to use that all up, so now I have the loan, a quarterly payment and ... $59,093 (as if 4/26/06). No only did my loan grow, but so did my shares. I've gained 44% in 20 months, or $18,000.

Now I'm faced with some choices. I could pay down the loan by cashing in the gain, which means I paid for 3/4 of my boy's college almost for free. Or I could let it ride for a few more years. If everything goes well (and this is NOT guaranteed), and I get a reasonable rate of growth, I'll have not only recovered the entire cost of his education, but if I pay the loan down with regular payments, I can use my prinicipal for retirement, or a T34 tank, or some such foolishness, but, oh so cool !

I used this technique to buy a 1945 Chevy 3 ton truck, with a separate account. The truck has been restored to look like a German convoy truck and it is in perfect running condition. In the year or so that my funds have been invested, they have grown by enough to fully cover the cost of the truck. In other words, I have an antique truck, suitable for reenacting, essentially for free.

You can fund anything like this. To give you some parameters on what you would need to do, write me with your goals. Put a price tag on your dream machine and I'll tell you what you need to do.

Remember a few things:

~ There is a $5000 minimum for these loans.

~ You must pay the interest, quarterly.

~ Growth in the investment is based on the stock market and returns are NOT GUARANTEED.

There is no limit on what you can do. If you find a T34 for $50,000, you need to invest $82,000.

If you have no money now, take comfort in that when I started out, I had nothing also. Systematic investment combined with PATIENCE, makes everything work out well.

You CAN have your T34 and eat it too.