Making money in cattle!

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@Warren Allison, I'm no good at explaning things to non believers. I think the average person only thinks of debt in consumer terms. I'd guess when 9 out of 10 people get a loan it's for a depreciating asset like a car, RV, swimming pool, bass boat, etc. The item they borrowed the money on is costing them monthly without providing a return and it's loosing value monthly so of course they just want to pay it off and be debt free. I've been in debt $1,000,000 dollars before and I'm still kicking and doing well. The reason why is because the items I was in debt for provided a return on investment. I don't make enough cash money to save up in million dollars in 20 yrs so of course I had to get a loan. When I decide to use my money or the banks outside factors play a big role. For the last several years we've been buying land that attaches to us as it comes up so I tried to keep plenty cash on hand for the 20% down, just like your classic car example. We finally bought the last 60 acres we wanted so now I'm more concerned with paying things off than I was before. Another thing most people don't realize is that while they're sitting around trying to save up and pay cash inflation is killing them. I'd say when you figure inflation in a 6% interest loan is actually 3%.
 
I haven't borrowed any money for years, but looking back there's times I should have on certain deals, now it would be worth 20x as much.
Using debt as a tool by a responsible hard working person is an absolute, as long as it is reasonable.
I just hate being in debt personally, so much so I paid off $500k in 7 years when I got in the chicken business, that was working 7 days a week, it paid off really good, I sold out a few years back and bought another ranch.

. . . or it could have been worth 1/20 as much now.
 
How are you using some one else's money if some one has to co-sign or personally guarantee it?

We are right back where we started at, you are still using your money.
If you are the co-signer, then you are right. My 22 yr old grandson could pay $75 to form an S-corp in Georgia. He has to put $500 in it, and the corporate book you get back will have 100 stock certificates in it ( because an s-corp can't have more than 100 share holders). No, his corporation could not go the next day and borrow $50k, 100 times the amount the company is worth. with no collateral and no co-signer But, if his company has a lot of cash flow, and the company has secured loans with him co-signing, to buy equipment, inventory, etc., and always paid it back, it may get to where it can borrow with no co-signer by putting up collateral the business owns. Eventually, he may get to the point that the company can secure a signature loan. If he had to loan his company the $50k himself, or had to co-sign that company loan, then no he isn't entirely using OPM. But even in this case, he is less exposed to loss than taking out a personal loan, or using his personal savings, to buy that $50k group of cows.

I realize this is a lot to absorb for people who don't have a lot of knowledge in business, taxes, corporate finance, etc. , and no one can learn it all from scratch from a few comments on a thread. It has taken me 35 years. I started learning in 1988 when I had to pay $68,000 in taxes from the money I made in my insurance agency. I was a sole propietor and commissions were paid to me..1099'ed to my SS number. The first year or two in business, commissions had started out at $400 a month the first month, and had gotten to about $2k a month, so I never worried about taxes. But that year I landed a large, 1100 employee group benefits account that paid about $20k a month, so that's why I ended up having to pay that much taxes. It snuck up on me, so to speak. So, my accountant suggested I form my first S-corp. Most taxes I have ever paid since then was maybe $2-$3k a year. Most years I let it show a loss. The next year I bought a truck and told her I titled it to my S-corp., so what now? She said damn, this is a mess, you should have let the company buy it ( I had paid cash), so I sold it to the company, and financed it for for the company. Next year I bought my then-wife a new SUV ( she was my secretary on paper, that I paid a salary to so she could be the 2nd employee the company had to have to buy group health insurance). This one, I co-signed a note for the company to buy it. A few years later I bought another truck, and the company secured the loan on its own. Some years, when manufacturers started offering 0% interest for x amount of months, I would personally buy one and finance it myself. Even if I had the cash to buy it, it would be foolish to do so, when there was no interest for 24 or 36 or however many months the car companies offered free financing. I would then lease that vehicle to my company. This is why S-corps were created..to allow the small business owner the ability to access some of the advantages big corporations have.
I don't care if people are skeptical, or un-educated on these concepts, or have a different way of doing it ( that I may not know of and might be better!). But don't try to say it can't be done when I have done it many times, and millions of people all over the country do it every day.
 
@Warren Allison, I'm no good at explaning things to non believers. I think the average person only thinks of debt in consumer terms. I'd guess when 9 out of 10 people get a loan it's for a depreciating asset like a car, RV, swimming pool, bass boat, etc. The item they borrowed the money on is costing them monthly without providing a return and it's loosing value monthly so of course they just want to pay it off and be debt free. I've been in debt $1,000,000 dollars before and I'm still kicking and doing well. The reason why is because the items I was in debt for provided a return on investment. I don't make enough cash money to save up in million dollars in 20 yrs so of course I had to get a loan. When I decide to use my money or the banks outside factors play a big role. For the last several years we've been buying land that attaches to us as it comes up so I tried to keep plenty cash on hand for the 20% down, just like your classic car example. We finally bought the last 60 acres we wanted so now I'm more concerned with paying things off than I was before. Another thing most people don't realize is that while they're sitting around trying to save up and pay cash inflation is killing them. I'd say when you figure inflation in a 6% interest loan is actually 3%.
You don't have cash partially because you are always servicing debt. Its a cycle that's hard to break.

Can you put that last bit of math in a real life scenio to show how a 6% loan became 3%?
 
If you are the co-signer, then you are right. My 22 yr old grandson could pay $75 to form an S-corp in Georgia. He has to put $500 in it, and the corporate book you get back will have 100 stock certificates in it ( because an s-corp can't have more than 100 share holders). No, his corporation could not go the next day and borrow $50k, 100 times the amount the company is worth. with no collateral and no co-signer But, if his company has a lot of cash flow, and the company has secured loans with him co-signing, to buy equipment, inventory, etc., and always paid it back, it may get to where it can borrow with no co-signer by putting up collateral the business owns. Eventually, he may get to the point that the company can secure a signature loan. If he had to loan his company the $50k himself, or had to co-sign that company loan, then no he isn't entirely using OPM. But even in this case, he is less exposed to loss than taking out a personal loan, or using his personal savings, to buy that $50k group of cows.

I realize this is a lot to absorb for people who don't have a lot of knowledge in business, taxes, corporate finance, etc. , and no one can learn it all from scratch from a few comments on a thread. It has taken me 35 years. I started learning in 1988 when I had to pay $68,000 in taxes from the money I made in my insurance agency. I was a sole propietor and commissions were paid to me..1099'ed to my SS number. The first year or two in business, commissions had started out at $400 a month the first month, and had gotten to about $2k a month, so I never worried about taxes. But that year I landed a large, 1100 employee group benefits account that paid about $20k a month, so that's why I ended up having to pay that much taxes. It snuck up on me, so to speak. So, my accountant suggested I form my first S-corp. Most taxes I have ever paid since then was maybe $2-$3k a year. Most years I let it show a loss. The next year I bought a truck and told her I titled it to my S-corp., so what now? She said damn, this is a mess, you should have let the company buy it ( I had paid cash), so I sold it to the company, and financed it for for the company. Next year I bought my then-wife a new SUV ( she was my secretary on paper, that I paid a salary to so she could be the 2nd employee the company had to have to buy group health insurance). This one, I co-signed a note for the company to buy it. A few years later I bought another truck, and the company secured the loan on its own. Some years, when manufacturers started offering 0% interest for x amount of months, I would personally buy one and finance it myself. Even if I had the cash to buy it, it would be foolish to do so, when there was no interest for 24 or 36 or however many months the car companies offered free financing. I would then lease that vehicle to my company. This is why S-corps were created..to allow the small business owner the ability to access some of the advantages big corporations have.
I don't care if people are skeptical, or un-educated on these concepts, or have a different way of doing it ( that I may not know of and might be better!). But don't try to say it can't be done when I have done it many times, and millions of people all over the country do it every day.

We all know what it takes for him to get the loan. I've been trying to drag it out of you for two pages. He's not going to walk away from that loan... corp or not.

You keep trying to give me your resume justify what you are saying rather than using math or facts. I'm not impressed. Every thing I own, my family owns, or I manage is in an LLC or corp. Everything from land to O&G companies to storage building, rebt houses, etc. My health insurance comes out of a ranch LLC simular to what you described. My brother actually manages billions in assets when they operate day in and out on debt. I can assure you I am well versed in in how things work and that's why I'm not buying what you are selling.

Keep back peddling and you might end up on solid ground eventually.
 
Thanks for the posts. I have a lot rolling around in my brain I need to do for various reasons and you put some different possibilities out then then what I had thought of. I may need to separate some things into their own unit for ease of transfer as time goes on.

And yes for everyone out there I will involve and consult the appropriate professionals before doing anything. I may have to build a flow chart for me to grasp it all.
That's what I did! And still do. I followed Zig Zigler's advice " Keep company with those who are more successful than you, and learn from them". That is why early in my business, I served on Chamber of Commerce committees, joined the country club ( social membership only. I detest golf), joined civic groups, studied for and achieved ChFC and CFP desinations, got series 6 and series 7 licenses, and got heavily involved in politics. My first 2 years I was in the insurance business, I rented 2 offices from a lawyer, inside his office. When he retired I moved into an office next door to my accountant. I would pick their brain til they dreaded seeing me coming! LOL
 
My cattle loan identifies as a school loan !

Sorry conversation was getting seriously serious.

We don't have any debt. Debt is not bad when used correctly. My 6 companies were all made by borrowing bank money. Obviously we pay off as soon as possible.
We use loans from owner's now if any money is needed.
However if a client owes a large amount of money in excess of what I can cover, then we will hit the bank money line.
I don't mind short term debt....but in today's market I more cautious about stacking debt.
Or, identify as a minority female and get a business loan! :) I think I am a black lesbian trapped in a white man's body!!
 
You don't have cash partially because you are always servicing debt. Its a cycle that's hard to break.

Can you put that last bit of math in a real life scenio to show how a 6% loan became 3%?
I don't have cash??? What are you even talking about? If I've got $50,000 in cash to run the cattle for a year or $60,000 for a down payment on the neighbors place that I think will come up for sale is that not cash money? I have cash, I just don't have an unlimited supply of it. Make no mistake, I'm not rich I have to get up and go to work everyday.

Lets say you want to build a barn that cost $50,000. You figure you can get a 6% loan for 5 years and have payments or wait 5 years and save up to pay cash. I promise inflation on that barn will be at least 3% a year if not 5%. In simple terms the barn you got a bid on today will be more expensive to build in 5 years. And don't say if you didn't have the payments you could save the money faster because you can pay extra payments too, it's the same thing.

We're not talking Dave Ramsey stuff here. He gives good advice but he doesn't give business advice, he gives consumer debt advice and they are 2 different things.
 
We all know what it takes for him to get the loan. I've been trying to drag it out of you for two pages. He's not going to walk away from that loan... corp or not.

You keep trying to give me your resume justify what you are saying rather than using math or facts. I'm not impressed. Every thing I own, my family owns, or I manage is in an LLC or corp. Everything from land to O&G companies to storage building, rebt houses, etc. My health insurance comes out of a ranch LLC simular to what you described. My brother actually manages billions in assets when they operate day in and out on debt. I can assure you I am well versed in in how things work and that's why I'm not buying what you are selling.

Keep back peddling and you might end up on solid ground eventually.
O K
 
I don't have cash??? What are you even talking about? If I've got $50,000 in cash to run the cattle for a year or $60,000 for a down payment on the neighbors place that I think will come up for sale is that not cash money? I have cash, I just don't have an unlimited supply of it. Make no mistake, I'm not rich I have to get up and go to work everyday.

Lets say you want to build a barn that cost $50,000. You figure you can get a 6% loan for 5 years and have payments or wait 5 years and save up to pay cash. I promise inflation on that barn will be at least 3% a year if not 5%. In simple terms the barn you got a bid on today will be more expensive to build in 5 years. And don't say if you didn't have the payments you could save the money faster because you can pay extra payments too, it's the same thing.

We're not talking Dave Ramsey stuff here. He gives good advice but he doesn't give business advice, he gives consumer debt advice and they are 2 different things.
You realize when people have "cash" or are saving "cash" it's not in a sock drawer right? That usually just means it's liquid and they can get their hands on it.

I see what you are saying. On that same barn, let's say you saved for it and lost 3% because of inflation while you were saving. Then, because you didn't take out a 6% loan, didn't you actually save 3% on that money after you subtract your 3% loss due to infation? 😉
 
You realize when people have "cash" or are saving "cash" it's not in a sock drawer right? That usually just means it's liquid and they can get their hands on it.

I see what you are saying. On that same barn, let's say you saved for it and lost 3% because of inflation while you were saving. Then, because you didn't take out a 6% loan, didn't you actually save 3% on that money after you subtract your 3% loss due to infation? 😉
I really hope you don't start drinking this early Brute. You are making no sense.

I save cash....actual money that's in the bank.
I have liquid assets..cattle, tractors, trucks, and other things I can quickly convert to cash.
I have stocks...never mess with them

My total debt load is around 15% of my net worth if that makes you feel any better.
 
Yall are trying to attack me or blame DR or use any excuse yall can find to justify what yall are saying other than math and facts. That is always the tell tell sign. 😄
You started the attacks and it's obvious you have no idea on anything other than making a house or pickup payment. Gee wiz Brute
 
Yall are trying to attack me...
ROFLMFAO!! If that's not the pot calling the kettle back, I don't know what is!!! Don't start a snowball fight if you can't take getting hit in the face by one. Still, you are one of the 2 people on here that I most value their opinion on Brahma and Brahma crosses.
 
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This whole mess escalated quickly. Something as easy as making money on cattle turned into a finance class.

Oh yes, the above example I gave on the barn...well I built one 5 years ago and after going back and forth about how to pay for it I decided to pay cash. It cost me $42,000 to build it. Last year I got a quote to build the same barn and it was a touch over $80,000.....that's how inflation steals your money. Glad I didn't dilly dally around.
 
This has been the most helpful info. I know Jeanne and I have watched her at work. I've watched her herd and her successes. If I have a question I always want to ask Jeanne. I told my husband once, "When I grow up, I want to be like Jeanne!"
Thanks Jeanne. I'm sharing this with my kids. They all want to continue in the cattle business and say to me, "But how do you make money at this?" We have limited land resources so commercial anything is out. My question: advertising. How do you get the word out that you have heifers/bulls/steers for sale? Im not a computer person so that works against me.
If you are breeding PB cattle, join your state breed assn. and State Beef Producers. If commercial, join State Beef Producers. Get involved.
Advertise in your breeds directory.
I don't know half the people that know me. But, I stay involved.
My nephew is phenomenal on FB. Posts all our babies as they are born. Even all this winter with everything filthy, he posts our yearlings and cows. Gets PR.
 

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