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Brandonm2

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Brute 23":366iyxzv said:
That is a good deal and its hard to argue with being bebt free....
BUT if your loan is for 8% and you were making 13% on the money. YOu could have had the ranch, money in the bank, and still be making 5%. :lol:

It doesn't work like that. First of all you should be managing a hedge fund someplace instead of punching cows if you can guarantee a 13% return on your financial investments year in and year out (7% is probably closer to the norm over time).....and you are neglecting the fact that you have to pay the IRS on that investment income BEFORE you make your loan payment. While you might expense the interest, you still have the issue of the principal payments.
 

dieselbeef

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buy land...start sweating...commence to always being happy yet curiously satified...and broke.

enjoy sunset wit a beer and wife!
 

STARSIX

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I wanted a place to hunt, tired of leasing other peoples and going by their rules , found a place was able to buy, bought 3 cows now up to twenty. funny thing, i found the cows are more important than the hunting. like Dieselbeef said nothing better than sipping a cold one and watching new calves play.
 

The Bachelor

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I started slow, and still going. I put a plan together and a timetable. I decided to try to keep the 401K intact.

First bought 10 acres and three goats.... called it a farm. Made a lot of mistakes. bought more goats. Then bought 50 acres then 20 more, then 30 more. Eventually bought cows. Sold 10 acres, because land prices went through the roof and bought an old farmhouse. The goal is to be debt free in 5 more years. I think I'm gonna make it. Then its me, the wife ,50 cows and 50 goats, no debt and a life of wealth and leisure...... or whatever $10k a year will get us....

My one regret is I bought heifers at first. If I were to do it again, I'd buy cow/calf pairs or bred cows.
 

Brute 23

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Brandonm2":19x6ours said:
Brute 23":19x6ours said:
That is a good deal and its hard to argue with being bebt free....
BUT if your loan is for 8% and you were making 13% on the money. YOu could have had the ranch, money in the bank, and still be making 5%. :lol:

It doesn't work like that. First of all you should be managing a hedge fund someplace instead of punching cows if you can guarantee a 13% return on your financial investments year in and year out (7% is probably closer to the norm over time).....and you are neglecting the fact that you have to pay the IRS on that investment income BEFORE you make your loan payment. While you might expense the interest, you still have the issue of the principal payments.

THose werer just thrown in numbers.
THe theory is right though. That is a very popular debate...
To be debt FREE VS Paying a smaller amount of interest on a loan than what you are gaining with that same amount invested (that is invested in what ever)
 

Brandonm2

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Brute 23":3gmut33r said:
Brandonm2":3gmut33r said:
Brute 23":3gmut33r said:
That is a good deal and its hard to argue with being bebt free....
BUT if your loan is for 8% and you were making 13% on the money. YOu could have had the ranch, money in the bank, and still be making 5%. :lol:

It doesn't work like that. First of all you should be managing a hedge fund someplace instead of punching cows if you can guarantee a 13% return on your financial investments year in and year out (7% is probably closer to the norm over time).....and you are neglecting the fact that you have to pay the IRS on that investment income BEFORE you make your loan payment. While you might expense the interest, you still have the issue of the principal payments.


THose werer just thrown in numbers.
THe theory is right though. That is a very popular debate...
To be debt FREE VS Paying a smaller amount of interest on a loan than what you are gaining with that same amount invested (that is invested in what ever)

There is NO debate. Paying 6-8% interest on a purchase for 30 years is always a losers game versus paying cash up front. You can run the numbers any way you want to run the numbers, if you factor income tax and a higher tax bracket into the equation paying cash and not having to pay interest makes you wealthier at the end of the day. NOW if you have really high income, there MIGHT be some benefit from being able to deduct interest expense on your taxes.
 

Brute 23

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YOu don't want to pay on it for 30 years.. but maybe 2 or 3. The key is to find out how long to pay it like that the interest does not tear you up. It does not always work in every case but there are alot of cases where it does.

If your already in the highest tax bracket where else can you go? :lol:

THE END.
 

Calman

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The way I got started,
I worked for a friend at one of his companies for 14yr.
When I turned 62 my plans were to move back to my home state of mo. He talked me into moving to one of his farms and keep watch over all his properity with a pretty good monthly salary. He and his wife travel all time from buisness to buisness.
I couldn't see myself just watching properity so I talked him into getting cattle.
Me and another friend who's been in the cattle buisness for 40yrs went to a guy's place who was selling out and bought 14 young mommas with second calfs at their side.
We now have 41 momma's and 3 bulls on 3 different places total of 639 acres.
I wouldn't have it any other way. I really enjoy my retirement and with the salary and the retirement check,and all the free hunting and fishing life just don't get any better than this.

Never was a couch potato. Sorry so long story.

Cal
 

Brandonm2

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Brute 23":3fw6ocqh said:
YOu don't want to pay on it for 30 years.. but maybe 2 or 3. The key is to find out how long to pay it like that the interest does not tear you up. It does not always work in every case but there are alot of cases where it does.

If your already in the highest tax bracket where else can you go? :lol:

THE END.

Certainly, if you are in a stock market boom cycle you want to ride that wave; but.....over time things tend to even out. 8% sounds pretty pedestrian but over time it is actually an above avg rate of return on investment. If you are in that highest tax bracket (and depending on your state) that is only a ~4.5 % return after taxes. IF you have an income source that can make up that difference between the ~net 4.5% return on investment and the 6 to 8% interest on the note plus principal payments you can certainly operate that way; but if you crunch the numbers they normally are going to come out in favor of an early payoff.
 

Brute 23

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Brandonm2":1swrsr82 said:
Brute 23":1swrsr82 said:
YOu don't want to pay on it for 30 years.. but maybe 2 or 3. The key is to find out how long to pay it like that the interest does not tear you up. It does not always work in every case but there are alot of cases where it does.

If your already in the highest tax bracket where else can you go? :lol:

THE END.

Certainly, if you are in a stock market boom cycle you want to ride that wave; but.....over time things tend to even out. 8% sounds pretty pedestrian but over time it is actually an above avg rate of return on investment. If you are in that highest tax bracket (and depending on your state) that is only a ~4.5 % return after taxes. IF you have an income source that can make up that difference between the ~net 4.5% return on investment and the 6 to 8% interest on the note plus principal payments you can certainly operate that way; but if you crunch the numbers they normally are going to come out in favor of an early payoff.

I prefer to pay most things off also, but there are times when you can do it the other way and make money. SOme times the hastle of all that is not worth the pay out though. :lol:
 

TheBullLady

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Got started in a fit of madness mostly. Grew up outside of Chicago.. rode and showed horses for years. New hubby suggested a few acres, went to the auction barn (called in sick from work) and bought 6 baby calves. (BIG mistake). One thing led to another.. five cows here.. I got started going to the auction barns and buying calves or anything cheap. Property values skyrocketed, so we sold the "farm" and moved to central Texas, luckily at a time when land was VERY cheap, paid cash for our place before realizing there wasn't a "home equity" loan program available in Texas. (Then, there is one now of course) Which actually worked out fine, but scary for the first few years!

The only thing I would have changed is possibly buying the small place across the street 12 years ago when it was only $400 per acre. Now that I'm a Realtor, it's astounding to see what property values are doing. But then, we lived through all of this in Illinois. It's just taken longer to hit Texas.

Made probably more $$ with the commerical cows than the registered, but I love showing, and breeding, so I enjoy the registered cattle more.
 

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