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Frequent Contributor

Re: Getting ready for 2011

When thinking about how my perspective on money has changed the last few years I realized that one of the end of the year rituals that I had done for years had been neglected.  For many, many years I would sit down at years end and excitingly do the year end balance sheet for our farm.  Watching that net worth grow and surpass goals I had set was very satisfying.  I realized a few days ago that I had not done this recently.   Checked my records and it has been about 3 years since I did one and the only reason it was done then was because a lender required it.   I started updating it the other day and quickly lost interest because I just don't care what it is anymore.  That is a major change in priorities for me.  

 

Years ago my first thoughts when I got up in the morning were making a mental list of everything I wanted to accomplish that day.  I hit the ground running very early in the morning and continued late into the night.  Today my first thought is that I hope I feel like doing something that day.  I now sit down for quite some time and drink coffee while reading different things that are selected to address different needs and interests in my life.  

 

Our pets (numerous dogs and cats) are a big source of enjoyment today.  I envy them at times because they are not cursed with the ever existing concern and thought about money.  I have concluded that the reason pets are so happy is that they just want their basic needs met which consists of food and love.  We should be so lucky.              

   

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Advisor

Re: Getting ready for 2011

Funny you mention the financial statement...I caught a thought yesterday in the back of my mind that it had been years since I'd done one, too.  This was before I got onto the subject with you, so perhaps it's just the time of year. 

I used to do a June 30 and December 31 net worth calculation statement to our lender.  It gave me a barometer of how we were steadily advancing, too.  I could see that steady march forward/"out from under" progression, too. 

Maybe, like you, I sort of miss that fix of positive numbers...but, like you, I am not all that hyped about taking the time and energy to assess it formally today.  I think I run a close approximation mentally anyway, and that may be largely why I do not want to comtemplate taking on any large new debt.  Even though I'd add the asset to the plus column, the older I get, the more I want to be at zero in the minus one....

Maybe the whole stewardship mindset is part of my hesitation to take on too much more land, too.  Ownership implies rights, but stewardship bears with it a heavy load of responsibility.  We have a lot of things we need to do for the land we already have taken on in life. 

 Maybe the farm my father leased for mining and then handed to me to get reclaimed is a large reason for my inclinations in this area...sort of a unique experience.  Probably the best analogy I can come up with this morning is that someone else got to make whoopee, and I got to birth the ensuing baby!  When you have to fix a really big environvmental problem that someone else created, it wears you out, makes you jaded about taking on more land, for sure. 

I laughed when I read your "to-do" list comment, too.  I was a habitual list writer for most of my adult lifetime.  Partly necessary when the kids where young, since most days, I felt like if my hair had been on fire, I could slow down a bit.   The practice continued  when the farming business got so demanding, and has only abated since we added an employee a few years back, so we could have some rest and a break occasionally. 

I lived by lists then.  Now, the only two I pay much attention to are the grocery list - to limit my tendency to browse and buy impulse items we really won't eat - and the one I construct as each bill and payment notice come in, so when I sit down at the computer, I do not forget to enter something, and have to boot up Quickbooks twice that week. 

I will probably start a list with test and major assignment dates soon, since that helps me to track my class demands better.  We are thre weeks into a 16-week session, so they are starting to appear on the syllabus for each class now.  May or may not need it, with only two courses at once - two of them run end-to-end this semester, rather than concurrently, as I had this time last year. 

I do trust that even "the  weakest ink" is stronger than my memory these days, don't you? 

There is a part of me that says that the focus we had on the details and dollars in earlier years is what buys us the luxury of that extra cup of coffee and a few more minutes of the news or reading that article now, before rushing out the door. 

Mike used to jump up and run every morning, too; but. he's gotten so he follows politics and public issues far better than I do now.  He tracks gossip via the girls and the hay customers...it's sort of funny, actually.  He picks up on who's happy and who's having a hard time...makes me feel positively out of the loop sometimes...which is, I guess, how he felt for the past four three decades. 

I think may maybe we both focused on so many "important" things for a long time, and now we see what are the truly worthwhile ways to spend the time we have left here.  What is more crucial to you today...leveraging another acre, or spending some time with the people you love?

I guess it is that "absence of striving" that I initally referred to,  when I said I "don't want to lose what we've already got for the risk of something more."  The things I want to remember as the  end result of this incarnation probably don't show up on a balance sheet. 

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Senior Contributor

Re: Getting ready for 2011

Jim,

Inflation is a concern that's sure to come in a few years. However, unless China's financial situation changes, ie, their uptrend in building infrastructure and such, or the US's bond rating begins to slip, we have some time to make sure the house is in order.

 

I'm only slightly younger than you perhaps, so I understand your sense to preserve assets.  However, any tenant worth his salt and reputation should not have to make the highest bid in the country to secure the land.  The ability to withstand cycles and a reputation for financial stability should count for something.  Anyway, It's not good for either party, the tenant nor the landlord, if prices become unsustainable.

 

Even so, without being aggressive, no tenant will achieve his/her business plan's targets without being aggressive in today's climate.  Will corn ground in IA go for 600 bucks this year?  Seems outrageous, but I'm not holding my breath anymore where this is heading. 

 

 

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Senior Reader

Re: Getting ready for 2011

Great post and something we're struggling with.  We just purchased a new tractor, completely financed (we've got a 2 year old tractor that's paid for).  We did this because we've lost complete confidence in our dealership's shop when working on our used equipment and it's worth the $7K per year in interest to us to have 2 new tractors completely covered by warranty. 

 

While our land debt is large in amount, our LTV ratio is pretty low.  Right now, a 50% (compared to APH) crop will cash flow at these prices.  One thing that I'm really wanting to do is expand into precision ag:  rtk, autosteer, variable rate, etc.  Obviously it would require a sizeable investment and I've got partners (considerably older than me & more conservative) that don't want to chance it & also they're not sure it would pay for itself and think it might be more of a luxury on an operation our size (700 acres).  We farm river bottoms and total losses / Prevent Plant claims are a real possibility.  And of course so is the chance that prices could fall.  My thinking though, what better time to expand our infrastructure to make us more productive?  I don't believe prices are going to fall much thru this next season, and if they don't and we have just an average (or bin buster) crop we've paid for the upgrades.

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Senior Advisor

Re: Getting ready for 2011

Actually, you've reached a pretty profound conclusion. The value of contentment and you can achieve at almost any asset level.

 

I thnk that the 80's taught me a great lesson. That I no longer wanted to be a young lion and runnthe rat race any longer. So instead of the pursuit of more and more rented ground and ever higher priced machinery. I changed my focus to land ownership. Instead of focus on expansion, it turned to efficiency with what we had.

 

We found we could live a comfortable life without a crushing debt burden. We have bought some farms and paid fpr them.and a couple of years ago sold the equipment and have the land custom farmed. We have the benefit of farming our own acres with out the investment in machinery and repair bills. Of course the custom farm rate is deductable. As it is ,I doubt that we could farm it ourselves at less cost.

 

We have a modest sized operation and have no expectation of expanding. But with the poor returns on bank savings , one might be inclined to buy a few more acres. At this stage of the game the expansion would benefit the next generation more than ourselves. Yet that is a worthy objective as long as we are living comfortably and doing the things we want to do.

 

I'm not comfortable with much debt but then I am at least a decade older and want the financial house in order. But then I am no longer in the expansion mode nor do I want to be. I like self financing my operation and doing what I want to do and making good money at it. It is really difficult to make the transition from active to inactive as I think I should be doing something instead of waiting for the grim reaper.

 

 

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Frequent Contributor

Re: Getting ready for 2011

"It is really difficult to make the transition from active to inactive as I think I should be doing something instead of waiting for the grim reaper."

 

kraft-t,   The above statement you made pretty much hits the nail on the head for me.  My perception of semi-retirement was to work on the farm some, do some volunteer work and get involved in church more.  It has not worked out like that thus far.   I think a big part of the problem is that I did some of that while I was public working / farming  full time and got burned out.   In all honesty, I can see myself going more from an extrovert to an introvert.  I just do not enjoy being around groups of people that much anymore.  One on one is fine.  Groups are not.  My major source of joy these days are my family and pets and being home at night.   Period. 

 

Work for me is therapy.  I feel good when I work.  Thing is that I like doing what I want to do when I want to do it.  I do not like being obligated to having to do things anymore.  Sometimes I feel like going.  Sometimes I don't.    If I am in a mood that I don't want to see anyone I don't want to be obligated to do it. 

 

I still want to help others but find it to be more of a one on one process rather than doing it through an organization. 

 

Am I screwed up in my thinking or do others out there share my perspective?   

 

 

 

     

 

 

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Senior Advisor

Re: Getting ready for 2011

We do quite a bit of family socializing. Mostly at  some resturant where dining has become entertainment. Even at that I prefer a smaller group as that seems to be the most enjoyable. While I like having the whole mob together at once, it proves to be too much confusion and less focusing on individuals.

 

I think that is part of aging in that we feel more confortable in smaller groups. In my day dreams I still would like ti buy equipment and do it myself but I am just an accident waiting to happen and it takes so darn long to heal anymore. Climbing around machinery and grain bins is not the job for me.

 

 

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