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debt load

J

jigs

Well-known member
Joined
Mar 17, 2005
Messages
8,447
Location
KANSAS
with the current market, and unstable future of this economy, my wife had a proposal yesterday that has me thinking....

we have a pretty high debt load, but if we sold our irrigated !1/4 we live on with the house and the new shop, sold off the cows, sold the cattle equipment on a farm sale, we would be debt free, and then purchase a house a neighbor is selling.

I am just getting this place to the point of how I want it, and hate to get rid of the cows, but we would be in a GREAT place financially to do this...

then we would look at buying a 40 and building a new home in a couple years.....


guess I am wondering what you guys think, if it is a step ahead or backwards
 
Depends on wether you are thinking with your heart or your head......with the price of cows this year I have thought more than once about selling out and getting back in, in a few years but when I sit down and really think about it it would kill me to sell out.........but everyone is different, I do this because I love it ( some days I wonder why) good luck with your decision and remember God will never make you deal with more then you can handle.....
 
With the way things are going in this country, I'd just keep on, keeping on.
How much are you going to lose to taxes if you sell out? That's a tough
loss to recouperate. If you have kept your own replacement heifers, can
you buy back that kind of quality? Remember that cattle numbers are way down. That has a bearing on cost of replacing your original cowherd./


I guess it could be justified either way. What does your wife want to do?
That would/should have a huge bearing on what you decide to do.

Good luck with your decision. I call this the 'crossroads of life.' A lot of
what happens in the future will depend on what you decide to do.
 
5 years ago I said to my wife that I would never sell and leave the ranch I was raised on. She could point out all the obvious things to me, like the fact that all the trees around us had been cleared and the wind blows all the time and the neighbours spray drifts into our windows and there's arsenic showing up in the groundwater and we aren't making a dent in our debt load and on and on and on.

But I was too stubborn to listen. I can say without any doubt, now that we have sold and moved to a different province and climate, that I wish I had done it 10 years ago. It took me a while to admit to myself that I wasn't happy anymore, because our area and ranch was not the same place I grew up loving.

If you're asking us on here, you obviously are already asking yourself buddy. Do what makes you happy and what is best for your family. I am glad I had the courage to support my wife's wishes, and she did the same for me. We are happier than ever in our new place.

Best of luck to you.
 
we would just build on another piece of ground a few miles away. not sure I want to see people farming MY place, but this economy, has me thinking it is the right move to make... the wife came up with the idea out of the blue.....


we farm about 900 acres, if we sell the home place, we lose only 100 acres of farm ground... so the income will not be hurt that bad at all. after the capital gains tax, we can wipe out 100% of our debt, and only have the money borrowed that we will need to build a home....


tough call, but it looks smarter every day
 
jigs said:
we would just build on another piece of ground a few miles away. not sure I want to see people farming MY place, but this economy, has me thinking it is the right move to make... the wife came up with the idea out of the blue.....


we farm about 900 acres, if we sell the home place, we lose only 100 acres of farm ground... so the income will not be hurt that bad at all. after the capital gains tax, we can wipe out 100% of our debt, and only have the money borrowed that we will need to build a home....


tough call, but it looks smarter every day
Click to expand...

I guess the other question to ask is do you want to eliminate your entire debt load? You can probably make as much or more renting pasture out in our area of the country as you can running the cows yourself all year.
 
jigs said:
we would just build on another piece of ground a few miles away. not sure I want to see people farming MY place, but this economy, has me thinking it is the right move to make... the wife came up with the idea out of the blue.....


we farm about 900 acres, if we sell the home place, we lose only 100 acres of farm ground... so the income will not be hurt that bad at all. after the capital gains tax, we can wipe out 100% of our debt, and only have the money borrowed that we will need to build a home....


tough call, but it looks smarter every day
Click to expand...

How would you farm it if you sold the equipment?
 
Remember one thing you can never buy cows as good,as the ones you raise yourself.The other thing,how important is money to you?To me it isn't,as long as i can pay my bills and have some leftover for myself i'm a happy man,and my niece and nephew can fight over it all after i'm dead.Do whatever your heart tells you to do!
 
Denny said:
jigs said:
we would just build on another piece of ground a few miles away. not sure I want to see people farming MY place, but this economy, has me thinking it is the right move to make... the wife came up with the idea out of the blue.....


we farm about 900 acres, if we sell the home place, we lose only 100 acres of farm ground... so the income will not be hurt that bad at all. after the capital gains tax, we can wipe out 100% of our debt, and only have the money borrowed that we will need to build a home....


tough call, but it looks smarter every day
Click to expand...

How would you farm it if you sold the equipment?
Click to expand...
not selling any equipment. would build a new shop at the hay yard, and operate out of there.... the sale would take me from a 2-1 debt to asset ratio to a 2-1 asset to debt ratio..... I will keep a few cows, but probably sell down the bulk of them
 
I would be living somewhere else by spring, if I could. Don't tarry, the land buying money is shrinking, and I'm almost proud to say my house is 2 miles from the first no-sale on irrigated land in a decade, in the continental US. Bunches of listed ground out this way with no takers... Your call, but if your serious, best hurry. Corn price and all...
 
Glad to know i am not the only one that has a high debt load and I find myself pondering similar ideas everyday. With just starting my own operation 8 years ago, farming around 800 acres and expanding from 20 to 270 cows in that time it scares the crap out of me to think of what could happen.

But oh well, if everything goes south on me, I cant have any less than what i started with and at least i got to live my dream for a little while.
 
I'm 45 years old and have a 20 year plan. Have zero debt by that time. As we expand from here on forward it will be in one of the kids name anyhow as I don't need it when they kick dirt in on me.
 
I don't think it makes sense at all. If you sell the land and the cows you have just sold off two income producing properties. And building a new house will just increase your debt again and won't produce a dime in income or depreciation. Crop prices are decent,cattle prices are pretty high, and interest rates are low. If what you want is a new home then that is your decision but it's not a good business move in my opinion. If you are struggling now you won't be any better off by selling income producing property and basically trading it for non income producing property. Debt is a tool just like a tractor. Granted yours is pretty high but just keep working on it and holding down expenses and give it some time. Lock in your interest rates. Granted debt can be a killer but look at the structure of your debt. If it is heavily weighted toward short term debt refinance some of it to long term. Keep your cash flow and debt service in line with each other. The lack of liquidity is the fastest way go broke. You are at the age where you are supposed to struggle a little. As the years pass you will improve your financial situation and life will be easier. Just keep reducing the debt as fast as you can and try not to buy anything that you don't really need. Just my humble opinion.
 
Red Barn Angus said:
I don't think it makes sense at all. If you sell the land and the cows you have just sold off two income producing properties. And building a new house will just increase your debt again and won't produce a dime in income or depreciation. Crop prices are decent,cattle prices are pretty high, and interest rates are low. If what you want is a new home then that is your decision but it's not a good business move in my opinion. If you are struggling now you won't be any better off by selling income producing property and basically trading it for non income producing property. Debt is a tool just like a tractor. Granted yours is pretty high but just keep working on it and holding down expenses and give it some time. Lock in your interest rates. Granted debt can be a killer but look at the structure of your debt. If it is heavily weighted toward short term debt refinance some of it to long term. Keep your cash flow and debt service in line with each other. The lack of liquidity is the fastest way go broke. You are at the age where you are supposed to struggle a little. As the years pass you will improve your financial situation and life will be easier. Just keep reducing the debt as fast as you can and try not to buy anything that you don't really need. Just my humble opinion.
Click to expand...


I see you point, but in reality, the cows are a hobby. only 50 pair. our true income is the hay business. we move close to 10,000 ton a year, with a pretty decent profit margin built in. selling the 1/4 is only 15% of the ground we farm, and we are taking on 4 more quarters in the next two years.... so production is not going to be hurt,..... selling it frees me up to expand the hay business...
 
pretty good rates, but this economy has me nervous...just thinking about being in a better situation
 
jigs said:
pretty good rates, but this economy has me nervous...just thinking about being in a better situation
Click to expand...

Don't blame you for being nervous. Inflation could start skyrocketing any day now.

Your downside is having cash and no where to put it for interest earnings.

And the coming inflation could eat cash fast.
 
I would sell in a heart beat. With Bubba in office, there is NO WAY I would be in debt. You are losing money, the minute you fell in love with your cows. Moving sucks, but is doable, besides, this way you can get rid of anything you haven't unboxed from before.
 

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