Question about borrowing money

[denvermartinfarms]

Arkansas and herofan, you both have good points. But sevarel years ago it would have been a lot easier to farm for a living without borrowing. I see no way anyone say under 25 that decided to farm or feed cattle for a living could start without borrowing money, unless they family set them up in the business. Would you say that if you don't do this full time maybe you shouldn't say wether or not borrowing money is right or wrong? I think a part time or hobby farmer and a guy trying to live of his operation are in to different worlds on this.

 

[backhoeboogie]

Conway Consulting teaches an excellent class on business case analysis. Sit in that class for 8 hours and pay attention. You don't need new equipment or the best of anything. You need to turn a profit. The more profit the better.

 

[Brute 23]

Arkansas and herofan, you both have good points. But sevarel years ago it would have been a lot easier to farm for a living without borrowing. I see no way anyone say under 25 that decided to farm or feed cattle for a living could start without borrowing money, unless they family set them up in the business. Would you say that if you don't do this full time maybe you shouldn't say wether or not borrowing money is right or wrong? I think a part time or hobby farmer and a guy trying to live of his operation are in to different worlds on this.

There are just some businesses 25yr olds don't need to be in... Broke people should stay away from businesses that require large amounts of capital to play in. Get a job, live on less than you make, save cash, ease in to it cash piece by cash piece.

If a young person wants to make money they should look in to service related jobs. They require little capital and have high returns. When you have a several employees and a fat wad of cash in the bank you can farm all you want.

 

[backhoeboogie]

live on less than you make

Brute that should apply to everyone, not just broke people. When they asked Reagan about ending the inflation he said, save money.

 

[denvermartinfarms]

live on less than you make

Brute that should apply to everyone, not just broke people. When they asked Reagan about ending the inflation he said, save money.

If the government don't have to why should anyone else? :lol2:

 

[Brute 23]

live on less than you make

Brute that should apply to everyone, not just broke people. When they asked Reagan about ending the inflation he said, save money.

If the government don't have to why should anyone else? :lol2:

That's the problem. Debt is like cocaine. There are people who can function fine and take care of business. They are the minority. If the whole country does cocaine it will go down the tubes because the vast majority can't handle it. Debt is the same way. If every one does it, the majority will fail and the few that don't will not be able to hold the others afloat.

 

[backhoeboogie]

For most of us, we have much more equity than debt. Many billion dollar corporations cannot sell out and break even or pay debt.

You can do a business case analysis to simply lose less money than you would have otherwise gone in the hole for.

My problem is, if I sell out, I gotta give Uncle Sam a huge cut in capital gains. So why not just use it for equity and borrow against it? Think about that. I sell a piece of land and Uncle Sam gets 35% of the profit. Maybe 33% on a given year. Or I can use it in a line of credit, borrow against it, and put the money back, then write off the interest paid. What makes the most sense?

 

[TexasBred]

That's the problem. Debt is like cocaine. There are people who can function fine and take care of business. They are the minority. If the whole country does cocaine it will go down the tubes because the vast majority can't handle it. Debt is the same way. If every one does it, the majority will fail and the few that don't will not be able to hold the others afloat.

Actually as a percentage of the whole in number of loans and in dollar volume very few loans ever default. They are paid in full and as agreed.

 

[Calhoun Farm]

Looks like I stirred up a hornets nest.

I did end up getting the loan, but I didn't buy holstein steers. Just no market for them here to make any money after feeding them. Angus steers are so high you can't make money on them either. I bought 4 heifers and 2 bulls. Plan on fattening up the 1 bull and selling him this spring, going to use the other bull as my herd bull. Plan on paying off the loan asap so I can "own" the cattle.

 

[backhoeboogie]

It was a good discussion. Some of us are passionate about our ways.

One size will never fit all.

You got a varied opinion. You got response. No need to apologize

 

[TexasBred]

Looks like I stirred up a hornets nest.

I did end up getting the loan, but I didn't buy holstein steers. Just no market for them here to make any money after feeding them. Angus steers are so high you can't make money on them either. I bought 4 heifers and 2 bulls. Plan on fattening up the 1 bull and selling him this spring, going to use the other bull as my herd bull. Plan on paying off the loan asap so I can "own" the cattle.

You did well. ;-)

 

[denvermartinfarms]

Hopefully you can get it paid off before you lose everything you have and go bankrupt. Also remember no matter what you will not make any money on these cattle involved in a loan :mrgreen: :mrgreen:

 

[Brute 23]

This will be my final statement I promise. Im not trying to pick on the original poster or any one else. It drives me crazy to see comments like "the only way for a young person to get in to farming or ranching is with debt" or "most succesfull people believe in debt".... I can tell you, as have others, that is just not true. There are people out there who do just fine with out it. No one is forced in to debt... you choose it... there is always another option.

If after watching the stock market crash, housing crash... volatiliy in weather and commodities... turmoil in other countries... turmoil in our own country and what debt has created... history of how bad it can actually get... you look around and say... What my family needs is some debt, that will help us prosper... then have at it. Just do it in a way that the rest of us don't end up paying for it in bailouts. :tiphat:

 

[bigbull338]

well the main thing i dont remember being mentioned here is this never put cattle up to buy cattles less you have to.because cattle die an if you loose alot of them your hung.put equipment up if you have to.

 

[TexasBred]

This will be my final statement I promise. Im not trying to pick on the original poster or any one else. It drives me crazy to see comments like "the only way for a young person to get in to farming or ranching is with debt" or "most succesfull people believe in debt".... I can tell you, as have others, that is just not true. There are people out there who do just fine with out it. No one is forced in to debt... you choose it... there is always another option.

If after watching the stock market crash, housing crash... volatiliy in weather and commodities... turmoil in other countries... turmoil in our own country and what debt has created... history of how bad it can actually get... you look around and say... What my family needs is some debt, that will help us prosper... then have at it. Just do it in a way that the rest of us don't end up paying for it in bailouts. :tiphat:

It's easy to have this opinion IF you really don't need any borrowed capital. The honest to goodness truth is that very few individuals and/or businesses have been able to operate continuously without having to borrow money at one time or another. Perhaps you are one of the few that has never had to. If so that's wonderful. You are definitely the exception rather than the rule. It simply does not work that way for the majority

 

[Calhoun Farm]

I'm not to worried at the moment. I bought some nice cattle from old farmers, mine didn't come from the sale barn. My wife and I have our home in real estate and as soon as we sell it we are moving to my families farm (where my cattle are). Once we do that we won't have a mortgage payment (saving roughly 12,000/yr) My loan is only 6000 on a 5yr term with annual payments so every August I pay around 1500. I have two holstein steers I bought before I got this loan so I'm going to use them to pay down some of the loan when I finish them out this coming spring. Going to also finish out a nice black baldy bull and put the money from him on the loan also.

 

[herofan]

Arkansas and herofan, you both have good points. But sevarel years ago it would have been a lot easier to farm for a living without borrowing. I see no way anyone say under 25 that decided to farm or feed cattle for a living could start without borrowing money, unless they family set them up in the business. Would you say that if you don't do this full time maybe you shouldn't say wether or not borrowing money is right or wrong? I think a part time or hobby farmer and a guy trying to live of his operation are in to different worlds on this.

Sure, good point. I wasn't really trying to shove right or wrong down anyone's throat. I was just raised a saver and a "pay cash" person, and haven't really seen a downside to that.

To address your scenario of the under 25 person, I wouldn't even consider going into farming from scratch. There would be way too much money and gamble involved for me. I guess that brings up another thing I've noticed. I see people borrowing money and taking risks when there are less risky ways to make the same amount of money they hope to make.

For example, people in my area of KY have gone nuts about raising corn the last few years. People are taking out loans for several hundreds of thousands to buy huge equipment that looks out of place around here, and planting corn in every nook and cranny they can find. They probably won't make as much in the long run as the guy down the road with 40 cows and an old 255 Massey Ferguson. So, why bother? Don't get me wrong. I'm not saying people shouldn't raise corn, but I think the guys around here are getting a little too big for their britches. My brother often jokes that they would probably be better off with a steady job at Wal-Mart.

I had a guy tell me once that the only sure way he could ever truly "make" any money was to just get a job and let someone give him a paycheck every week. I know what he means. I guess that just shows, however, that I am a dull person. I'm not much of a risk taker or adventurer.

 

[denvermartinfarms]

Herofan, I meant no disrespect to you at all. I come from a rare prospective I guess. I have said on here more than once, I would rather take all the risk involved, work 80 hours a week, and make less money to be able to farm and work for my self, than to have a good paying 40 hour a week job with retirement,insurance and a boss. That's me, I would rather live comfortable and happy, than wealthy and be on someone else's payroll.

 

[cross_7]

I know a guy that said his goal in life was to borrow a million
He said if he could get a guy that was smart enough to become wealthy and convince him to loan him a million dollars
Then he had beat him and won in the game of life.
I don't think he has won yet

 

[denvermartinfarms]

I know a guy that said his goal in life was to borrow a million
He said if he could get a guy that was smart enough to become wealthy and convince him to loan him a million dollars
Then he had beat him and won in the game of life.
I don't think he has won yet

I would imagine not.