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Senior Advisor
Posts: 9,317
Registered: ‎05-10-2010
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Re: Debt free farming operations

It depends on your status in life. If you are younger and growing your business, It is almost impossible to operated debt free. The trick is to use borrowed money responsibly. That means buying equipment and stuff you really need instead of investing is stuff you merely want. For example, I bought a quality trailer sprayer for around $25K and I used it to spray a thousand acres twice each year. 2000 acres of spraying at $5 per acre equaled $10K in custom spraying avoided. Of course that was not all savings but on top of that you could shop for chemicals at a savings instead of relying on the local coop. So it's making good use of borrowed dollars that count.

 

If you are older and out of the expansion mode than you may find it comfortable to operate on your own money. You make managment decisions based on their merits rather than whether a lender wishes to influence your decision making. eventually everyone wants a cash surplus as a safety net or a down stroke on a real estate investment.