Question about borrowing money

[Brute 23]

Guess Im ol school, but if you have to borrow money for a small herd you dont need to be in the business. Save your money up and when you have enough, proceed. You will sleep a whole lot better at night.

I don't see it that way myself for cattle, but I go with your logic 1000% on all if these kids getting loans to go to collage anymore, so after those years and all that debt is piled up they might have a job or maybe not, and if not all that time and money is gone to nothing.

There is no difference. A loan is a loan and there is always risk with it.

 

[denvermartinfarms]

Guess Im ol school, but if you have to borrow money for a small herd you dont need to be in the business. Save your money up and when you have enough, proceed. You will sleep a whole lot better at night.

I don't see it that way myself for cattle, but I go with your logic 1000% on all if these kids getting loans to go to collage anymore, so after those years and all that debt is piled up they might have a job or maybe not, and if not all that time and money is gone to nothing.

There is no difference. A loan is a loan and there is always risk with it.

Your right, there is no doubt about that, I have just always felt good about having money in cattle over other things.

 

[Brute 23]

IMO school loans are just like cattle loans.

The majority don't make it.
The next largest chunk spends their whole life paying them for little reward over just going another route.
A small percent thrive... and most likely those people would have made it either way... Loan or no loan... the loan was the easier route.

 

[Taurus]

That said, I don't want use any loan money on Holstein steers and finish them out.

 

[backhoeboogie]

That said, I don't want use any loan money on Holstein steers and finish them out.

The scary part about that is the cattle population.

Beef herd numbers are shrinking.

As far as the marketing is concerned, they are not angus and this has put us in an "us and them" scenario. Order buyers know the difference between holstein and beefmaster but orders are orders.

We may not have any choice for feeders in the future if herds keep reducing.

 

[herofan]

Guess Im ol school, but if you have to borrow money for a small herd you dont need to be in the business. Save your money up and when you have enough, proceed. You will sleep a whole lot better at night.

that's the way I see it, but I realize a lot don't. I'm always fascinated by how people manage money. Don't get me wrong, I'm not saying my way is the only way. I was just taught to be a saver, and i guess I embrace that. Being a saver has never gotten me in financial trouble. I actually wish someone could convince me that owing on stuff is just as good as the way I do it, but I just can't see it.

I bought a small herd of 17 heifers with cash. I wouldn't have even considered it had i not already had the money. I do sleep well at night. If I go out tomorrow and they are all lying dead in the field, that is where it ends. Sure, it's a huge loss, but I don't have to worry about paying off a loan for some dead cattle or where the money will come from in the future.

 

[Howdyjabo]

My loans are on feeder calves. I wouldn't get a loan on cows.
Not sure a banker would loan money on cows- too risky for the cash flow. No way to hedge them.

 

[backhoeboogie]

Guess Im ol school, but if you have to borrow money for a small herd you dont need to be in the business. Save your money up and when you have enough, proceed. You will sleep a whole lot better at night.

that's the way I see it, but I realize a lot don't. I'm always fascinated by how people manage money. Don't get me wrong, I'm not saying my way is the only way. I was just taught to be a saver, and i guess I embrace that. Being a saver has never gotten me in financial trouble. I actually wish someone could convince me that owing on stuff is just as good as the way I do it, but I just can't see it.

I bought a small herd of 17 heifers with cash. I wouldn't have even considered it had i not already had the money. I do sleep well at night. If I go out tomorrow and they are all lying dead in the field, that is where it ends. Sure, it's a huge loss, but I don't have to worry about paying off a loan for some dead cattle or where the money will come from in the future.

What if you paid cash for your tractor - a modestly older model, bought 75 acres, had your house paid for and land it sets on? You could get a secured line of credit for $240,000 and a very low interest rate. A great offer came in on 30 head from an estate being sold. A deal so good you could buy them and haul them to the sale barn and make money. You are saying you would not buy because you didn't have cash on hand? That doesn't make business sense to me.

 

[TexasBred]

What if you paid cash for your tractor - a modestly older model, bought 75 acres, had your house paid for and land it sets on? You could get a secured line of credit for $240,000 and a very low interest rate. A great offer came in on 30 head from an estate being sold. A deal so good you could buy them and haul them to the sale barn and make money. You are saying you would not buy because you didn't have cash on hand? That doesn't make business sense to me.

If those deals popped up everyday it would be worth the line of credit. Develop a good relationship with your banker and you can still right that check, line or no line. He'll make sure it gets covered. Many small bankers still do it the old way. Find a bargain, write a check, call the banker and tell him what you did and go by and sign a note when you get a chance.

 

[Brute 23]

Guess Im ol school, but if you have to borrow money for a small herd you dont need to be in the business. Save your money up and when you have enough, proceed. You will sleep a whole lot better at night.

that's the way I see it, but I realize a lot don't. I'm always fascinated by how people manage money. Don't get me wrong, I'm not saying my way is the only way. I was just taught to be a saver, and i guess I embrace that. Being a saver has never gotten me in financial trouble. I actually wish someone could convince me that owing on stuff is just as good as the way I do it, but I just can't see it.

I bought a small herd of 17 heifers with cash. I wouldn't have even considered it had i not already had the money. I do sleep well at night. If I go out tomorrow and they are all lying dead in the field, that is where it ends. Sure, it's a huge loss, but I don't have to worry about paying off a loan for some dead cattle or where the money will come from in the future.

What if you paid cash for your tractor - a modestly older model, bought 75 acres, had your house paid for and land it sets on? You could get a secured line of credit for $240,000 and a very low interest rate. A great offer came in on 30 head from an estate being sold. A deal so good you could buy them and haul them to the sale barn and make money. You are saying you would not buy because you didn't have cash on hand? That doesn't make business sense to me.

It doesn't make sense that if you don't have the money to pay for some thing you dont buy it?

Pretty sure that is why our country is going down the tubes. No one has patience (a sign of maturity). Can't wait to save up money to buy a house... get a loan... can't wait for a new car... get a loan... can't wait for the next deal on cattle... get a loan.

 

[herofan]

Guess Im ol school, but if you have to borrow money for a small herd you dont need to be in the business. Save your money up and when you have enough, proceed. You will sleep a whole lot better at night.

that's the way I see it, but I realize a lot don't. I'm always fascinated by how people manage money. Don't get me wrong, I'm not saying my way is the only way. I was just taught to be a saver, and i guess I embrace that. Being a saver has never gotten me in financial trouble. I actually wish someone could convince me that owing on stuff is just as good as the way I do it, but I just can't see it.

I bought a small herd of 17 heifers with cash. I wouldn't have even considered it had i not already had the money. I do sleep well at night. If I go out tomorrow and they are all lying dead in the field, that is where it ends. Sure, it's a huge loss, but I don't have to worry about paying off a loan for some dead cattle or where the money will come from in the future.

What if you paid cash for your tractor - a modestly older model, bought 75 acres, had your house paid for and land it sets on? You could get a secured line of credit for $240,000 and a very low interest rate. A great offer came in on 30 head from an estate being sold. A deal so good you could buy them and haul them to the sale barn and make money. You are saying you would not buy because you didn't have cash on hand? That doesn't make business sense to me.

Sure, I'm not saying there is never a time to borrow money, and I'm not one to argue against it regardless of the situation. I'm just not in a "borrowing state of mind," so I'm sure I don't do it nearly as much as other people. I just see people who borrow money and think no more of it than drinking a cup of coffee in the morning, and I don't think that is positive in the long run. I don't see how people sleep at night owing so much money, or do they know something I don't? Is there an easy way out of debt if something goes wrong?

 

[denvermartinfarms]

Seems like this subject is to the point of :deadhorse: :lol2:

 

[herofan]

Seems like this subject is to the point of :deadhorse: :lol2:

That's probably true. Maybe it's one of those things that works either way; it just depends on what life you want to lead. There is just something about various financial strategies that I find interesting. I suppose if you're rich, it doesn't matter.

Most of the people I know are just middle class people with decent jobs and incomes. I've noticed there are two basic types among them.

One, they don't have a lot of stuff. House is modest, cars aren't new, etc., yet they don't complain about money. They are usually the one's who put an extra $500 in the collection plate instead of $20 when the church needs repairs. They've just decided to work their jobs and live within their means, and at the same time, their bank account grows a bit.

Two, they have a lot of stuff, which can vary. It may be boats and campers, or fancy tractors that could move a mountain; however, they couldn't buy a stick of gum spur of the moment, and they have to work constantly to keep the money rolling in to make all the payments.

 

[backhoeboogie]

I don't really see it as one or the other.

It would be terrible for me to be 10 million in debt. However, if it were 10 million in debt, had 100 million in equity, and was making large cash flow on the debt, that debt would be trivial.

I'll jump in a heart beat if there's money to be made. Buy something and flip it for profit, pay off the debt and pocket the difference.

It is not about buying toys. I would not go in debt for toys. I would not rationalize putting all my liquid in a new tractor just because I wanted it either.

 

[denvermartinfarms]

I don't really see it as one or the other.

It would be terrible for me to be 10 million in debt. However, if it were 10 million in debt, had 100 million in equity, and was making large cash flow on the debt, that debt would be trivial.

I'll jump in a heart beat if there's money to be made. Buy something and flip it for profit, pay off the debt and pocket the difference.

It is not about buying toys. I would not go in debt for toys. I would not rationalize putting all my liquid in a new tractor just because I wanted it either.

Right, that was my point about borrowing for school verses something you are buying that is standing in the field that you can sell and get your money out of or at least some of it. If I borrow money to buy cattle and I sell them and get more than I had in them and more than the interest I paid I have made money of of the banks money, that I didn't have to come up with. We can't all agree on this because we are not all the same kind of operation, but I don't think any of us can say that there is only one way to go, or that everyone should borrow or knowone should borrow. This ain't a one size fits all business.

 

[TexasBred]

It doesn't make sense that if you don't have the money to pay for some thing you dont buy it?

Pretty sure that is why our country is going down the tubes. No one has patience (a sign of maturity). Can't wait to save up money to buy a house... get a loan... can't wait for a new car... get a loan... can't wait for the next deal on cattle... get a loan.

Most all larger corporations and mom and pop businesses operate on borrowed money. You can't always sit and wait for receivables to come in. It's often very good business as well. Do the O&G companies operate on cash only?? Just make sure your rate of return is considerably more than your cost of funds.

 

[Arkansas]

Best way to go is ALWAYS cash, credit will just get you in debt. Your not moving forward when your in debt, your breaking even ALWAYS. Bank can tell you that IF you make your payments like your suppose to. It's just some people have no choice but to take out loans to get what they need. But hands down best way is to just work and save, if you don't have the money in the first place for it then you can't afford it.. If anyone says other wise it's because there taking out Loans or trying to justify being in debt...lol

 

[bigbull338]

but remember if you dont have credit you cant borrow money if you really need it.

 

[Brute 23]

but remember if you dont have credit you cant borrow money if you really need it.

And when would that be???? People who pay cash tend to plan ahead by using things like a budget... retained earnings... savings. Its kind of funny how people who tend to pay cash... always have cash on hand. :lol2:

 

[Bigfoot]

I got into farming little at a time over a long period of time. I have never been a fan of borrowing money. I could see justifying borrowing for stockers, or bred cows to resell later. I wouldn't want to borrow money for cows to keep.