Tool rust in humid garage

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Another question, my garage has no insulation or vapor barrier. Only the side against the house. The sheet rock is not great anyway. I don't plan on heating the garage, but should i consider pulling the sheet rock down, insulating and adding a vapor barrier? If i did, should i re sheet rock it, then panel it? Or use plywood with paint? What coverings would be good? I have garage length wire shelving now.
 
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