Being honest

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Re: Being honest

Post by bbirder » Fri Nov 08, 2019 8:38 pm

Make that good money and sock away all you can. Invest wisely. Pay your taxes. What you are describing is not a part time job. When you retire and you still have it in your blood, start you a small herd and grow it. If you are fortunate you will not be broke before you get it out of your blood. There are legitimate deductions but most of them you can't eat!


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Re: Being honest

Post by ccr » Fri Nov 08, 2019 8:44 pm

hate to be a naysayer, but don't see paying for working facilities, fences, and other expenses on how this is going to profitable.

for irs deductions don't you have to show a profit after so many years?

if it's the lifestyle your looking for i say go for it.
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Re: Being honest

Post by farmerjan » Fri Nov 08, 2019 10:52 pm

Please don't take my comments in a negative way or attitude. I just think that you really do need to understand that no matter how/what you do, and believe me, I have seen alot in 40+ years, farming is not the "way to make money".... especially if you are getting into it. Yes you do have to show some sort of a profit....every so many years. This is where a good accountant/tax person is essential for you if your income is that substantial. I am all for it, but you need to understand the subtleties....
Doing feeders in the spring and selling in the fall is the right way for you to "get into it" as opposed to any type of breeding/calving operation. Still, you are going to HAVE to have minimal working facilities because feeders tend to get sick when taken off cows, sold, moved through a stockyard or facility that hundreds of others have been through and the germs etc. left behind, and then trailered to your place. You are still going to have to spend a considerable amount of money in the infrastructure, and I honestly don't know how much can be written off. AGAIN, knowledgeable tax/accountant person. The feeders are going to require TIME and EFFORT for the first several weeks.
That is why I suggested that if you really want to get this property, and all, get it set up somewhat, and rent it out to someone for a couple of years get a small income from it, not the risk..... Offer to work for them for free, get some experience. Maybe in a year or two, offer to go in halves on the calves in lieu of rent or something. Make sure you can put in the time when it is needed....
Maybe you won't like it....maybe it will fire you up more and then you will have a little more practical experience in it and can honestly do it on your own.

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Re: Being honest

Post by farmerjan » Fri Nov 08, 2019 11:13 pm

One other thing I wanted to comment on. You said that at 4% interest, you have been told to just keep making the payments, not pay it off. And that you didn't want to take it out of your savings to pay it off. Not to be nosy, but what is your savings paying you? I have PART of my retirement account money in a guaranteed return account at 2.5% but it is liquid so I can get at it if I need it. The rest is in higher risk, and usually higher return, but at my age, I don't want to carry a big risk because there aren't the years to "come back" if we have another drop like in 2008/2009.... I lost half of my small retirement and when I made it back, I moved a bunch of it to a safer account. A regular savings account is less than 1% ??? If I had debt that was costing me 4% and I was only earning 2%, then I am losing money. I would pay off the debt, then I wouldn't be paying any out and even at a very modest interest, I would be gaining a little. You are looking at "losing money" in a small return account against inflation, but it is still better than paying out a 4% interest rate. You could take money out of your savings, pay off/down on that debt and the money saved from the initial monthly payment could be socked back into the place. Equity ......
I don't think he has all the answers..... But have you ever read anything by Dave Ramsey? He is big on not having any debt, except a mortgage, and then how to invest to be "rich" and there are all kinds of tax shelters to be able to take advantage of. I think that it might be of some benefit to spend a little time studying some of what he "preaches". Not saying you can't still do some of what you want with the farming.... no one said you have to do it all his way or no way. But it sounds like you are fairly disciplined, so ......
Just thought I would throw that out there.

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Re: Being honest

Post by cowgal604 » Sat Nov 09, 2019 9:00 am

WestTNguy wrote:
Thu Nov 07, 2019 10:53 pm
I have debated posting this. I have read, prayed, calculated, computed and brainstormed more in the last several months than I believe I ever have.

I decided to post this, because I feel like even with the anticipated criticism, I can still gain some valuable knowledge from you all. I am very impressed with the depth of knowledge in this forum.

I was introduced to farming, and cattle from a young age, but never had the time or money to put into it until recently. I fully believe that if my best friend hadn’t asked me to come to college with him so “we could party together” that I would be farming right now. That’s just what you did where I come from. From that, I have been fortunate enough to make a pretty be nice good living in the medical field. I ended up dating the right girl who taught me how to study and I ended up where I’m at. I do well, but I am not rich. And I have a lot of debt that came with my education.

Now that my life has finally settled, and I am back home, I have met several neighbors who farm and they reignited the flame to get into it.

After doing some research, and I’m just going to be frank, the tax exemptions from farming almost look too good to be true. I get eaten alive every single year. I’ve easily paid half a million since finishing school. I have the time to do this, but the knowledge is something I am still working on. I want to lay out my plan, and see what you guys think. I have read every article that I can find on the UT extension website. I have watched hundreds of hours of video. I have spent time on my neighbors farms. I have talked to tax advisors. I have taken the states Master Beef program. I got my BQA certification. But I want unbiased opinions.

I am planning on buying 37 acres. 5 are pasture, 11 are tillable, and 18 are timber. I want to use 2 acres to build a house. I had a guy look and they will be able to harvest some timber for profit. I don’t know how much. For the rest, I will buy a dozer and finish to use for pasture. I hope to build some equity. Obviously shelter, fencing, water, etc will be installed at some point also. These will all be wrote off. I hope this is making sense...

In the midst of all this, is where the cattle comes in. My plan is to buy steer calves each year to raise and sell. But really, I have no idea what to do here. My eyes cross thinking about it. My thought was that they would be more manageable for someone with no experience, and still show that I’m actively farming. Again, taxes are my main goal. Any “real” profit generated would just be a cherry on top. If anyone has some insight, I would love to hear it. I’ve never gone into anything half-assed and I don’t intend to start now. This plan of mine makes sense, but I’ve been wrong before.

Thanks in advance.
I don’t know how it works in the USA but in Canada we also get significant tax breaks well farming. It was the main reason why my step father bought my mom and I the ranch 20 years ago. It has saved him significant amounts each year and also gave us a lifestyle we wanted. We have gone on to buy 2 more bcs of the gains we have seen in the land investment alone. We have a total of 20 acres which around here is very large. I have never made money on cattle really. I think I made $5,000 last year on cows. It’s really a hobby. But saved by it lowering all of our income and tax due to write offs and tax breaks. We grow marijuana and raise cows, chickens and sheep. Took us 3 building years to get it all going. We saw our first income in the 4th year. Because we are all self employed, we benefit from the government farm rules. If u had a regular 9-5 I don’t think it would save us much. I got myself a good accountant that really understood farm regulations. He made the plans.

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Re: Being honest

Post by WestTNguy » Sat Nov 09, 2019 9:49 am

Hemp is now legal to grow here too, and the government has been generous from what I understand. My only fear is that 1.) the rush to get in will drive prices down 2.) I’ve heard it is extremely time-intensive.
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Re: Being honest

Post by TennesseeTuxedo » Sat Nov 09, 2019 10:09 am

WestTNguy wrote:
Sat Nov 09, 2019 9:49 am
Hemp is now legal to grow here too, and the government has been generous from what I understand. My only fear is that 1.) the rush to get in will drive prices down 2.) I’ve heard it is extremely time-intensive.
And labor. In addition it requires a lot of water.
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Re: Being honest

Post by WestTNguy » Sat Nov 09, 2019 10:09 am

farmerjan wrote:
Fri Nov 08, 2019 11:13 pm
One other thing I wanted to comment on. You said that at 4% interest, you have been told to just keep making the payments, not pay it off. And that you didn't want to take it out of your savings to pay it off. Not to be nosy, but what is your savings paying you? I have PART of my retirement account money in a guaranteed return account at 2.5% but it is liquid so I can get at it if I need it. The rest is in higher risk, and usually higher return, but at my age, I don't want to carry a big risk because there aren't the years to "come back" if we have another drop like in 2008/2009.... I lost half of my small retirement and when I made it back, I moved a bunch of it to a safer account. A regular savings account is less than 1% ??? If I had debt that was costing me 4% and I was only earning 2%, then I am losing money. I would pay off the debt, then I wouldn't be paying any out and even at a very modest interest, I would be gaining a little. You are looking at "losing money" in a small return account against inflation, but it is still better than paying out a 4% interest rate. You could take money out of your savings, pay off/down on that debt and the money saved from the initial monthly payment could be socked back into the place. Equity ......
I don't think he has all the answers..... But have you ever read anything by Dave Ramsey? He is big on not having any debt, except a mortgage, and then how to invest to be "rich" and there are all kinds of tax shelters to be able to take advantage of. I think that it might be of some benefit to spend a little time studying some of what he "preaches". Not saying you can't still do some of what you want with the farming.... no one said you have to do it all his way or no way. But it sounds like you are fairly disciplined, so ......
Just thought I would throw that out there.
Jan, I have read a Dave Ramsey’s book. Unfortunately, my family did not come from much at all. We were very poor. I’ve had to teach myself everything, and fortunately get to pick up tidbits from folks at work who are much better off than I am. I believe Dave Ramsey is very good for most people IN GENERAL. Everyone has their own personal financial situations. Would he tell me to pay off my student loan debt? Yes he probably would. But for me personally, my employer matches my retirement contributions (free money). I also keep a large part of my savings in Index Funds, since historically the market has returned an average of 7%. The rest I keep in a “high interest” savings account for stuff like emergencies. I plan to diversify some with real estate once I get married (that’s a whole other story) and maybe some with the cows. If I can have a tractor I can depreciate each year, that holds its value...I can sell it later and recover some cash. I hope. I’m not an expert at this, but I feel like this is the best method for me.

The stock market could tank any day, and I lose a lot. It has always come back up. Having some diversification is your only insurance. I figure that people still need to eat, so this is where the cows (hopefully tax breaks) come in.
The truth is like poetry. Most folks hate poetry.

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Re: Being honest

Post by WestTNguy » Sat Nov 09, 2019 10:24 am

WestTNguy wrote:
Sat Nov 09, 2019 10:09 am
farmerjan wrote:
Fri Nov 08, 2019 11:13 pm
One other thing I wanted to comment on. You said that at 4% interest, you have been told to just keep making the payments, not pay it off. And that you didn't want to take it out of your savings to pay it off. Not to be nosy, but what is your savings paying you? I have PART of my retirement account money in a guaranteed return account at 2.5% but it is liquid so I can get at it if I need it. The rest is in higher risk, and usually higher return, but at my age, I don't want to carry a big risk because there aren't the years to "come back" if we have another drop like in 2008/2009.... I lost half of my small retirement and when I made it back, I moved a bunch of it to a safer account. A regular savings account is less than 1% ??? If I had debt that was costing me 4% and I was only earning 2%, then I am losing money. I would pay off the debt, then I wouldn't be paying any out and even at a very modest interest, I would be gaining a little. You are looking at "losing money" in a small return account against inflation, but it is still better than paying out a 4% interest rate. You could take money out of your savings, pay off/down on that debt and the money saved from the initial monthly payment could be socked back into the place. Equity ......
I don't think he has all the answers..... But have you ever read anything by Dave Ramsey? He is big on not having any debt, except a mortgage, and then how to invest to be "rich" and there are all kinds of tax shelters to be able to take advantage of. I think that it might be of some benefit to spend a little time studying some of what he "preaches". Not saying you can't still do some of what you want with the farming.... no one said you have to do it all his way or no way. But it sounds like you are fairly disciplined, so ......
Just thought I would throw that out there.
Jan, I have read a Dave Ramsey’s book. Unfortunately, my family did not come from much at all. We were very poor. I’ve had to teach myself everything, and fortunately get to pick up tidbits from folks at work who are much better off than I am. I believe Dave Ramsey is very good for most people IN GENERAL. Everyone has their own personal financial situations. Would he tell me to pay off my student loan debt? Yes he probably would. But for me personally, my employer matches my retirement contributions (free money). I also keep a large part of my savings in Index Funds, since historically the market has returned an average of 7%. The rest I keep in a “high interest” savings account for stuff like emergencies. I plan to diversify some with real estate once I get married (that’s a whole other story) and maybe some with the cows. If I can have a tractor I can depreciate each year, that holds its value...I can sell it later and recover some cash (just an example). I hope. I’m not an expert at this, but I feel like this is the best method for me.

The stock market could tank any day, and I lose a lot. It has always come back up. Having some diversification is your only insurance. I figure that people still need to eat, so this is where the cows (hopefully tax breaks) come in.
The truth is like poetry. Most folks hate poetry.

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Re: Being honest

Post by cowgal604 » Sat Nov 09, 2019 10:26 am

TennesseeTuxedo wrote:
Sat Nov 09, 2019 10:09 am
WestTNguy wrote:
Sat Nov 09, 2019 9:49 am
Hemp is now legal to grow here too, and the government has been generous from what I understand. My only fear is that 1.) the rush to get in will drive prices down 2.) I’ve heard it is extremely time-intensive.
And labor. In addition it requires a lot of water.
I use little labour and all my water comes from rain barrels, well, and offset condensation from AC units. I even share my water with my neighbour. And I’m growing like 1,500 plants

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Re: Being honest

Post by cowgal604 » Sat Nov 09, 2019 10:28 am

WestTNguy wrote:
Sat Nov 09, 2019 9:49 am
Hemp is now legal to grow here too, and the government has been generous from what I understand. My only fear is that 1.) the rush to get in will drive prices down 2.) I’ve heard it is extremely time-intensive.
Prices always go up and down. Weed is like oil. You see the ebb and flow. Right now we are on a downward trend after coming off a really high market. We tend to see the same ups and downs every year. But, it’s always best in this market to be niche. I produce the heavy stuff. Medical always has a market but recreational is by far more profitable.

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Re: Being honest

Post by WestTNguy » Sat Nov 09, 2019 10:46 am

cowgal604 wrote:
Sat Nov 09, 2019 10:28 am
WestTNguy wrote:
Sat Nov 09, 2019 9:49 am
Hemp is now legal to grow here too, and the government has been generous from what I understand. My only fear is that 1.) the rush to get in will drive prices down 2.) I’ve heard it is extremely time-intensive.
Prices always go up and down. Weed is like oil. You see the ebb and flow. Right now we are on a downward trend after coming off a really high market. We tend to see the same ups and downs every year. But, it’s always best in this market to be niche. I produce the heavy stuff. Medical always has a market but recreational is by far more profitable.
Very interesting. Although I have tried my hand in growing a few plants back in college :lol: :lol: , I doubt I mess with it now.
The truth is like poetry. Most folks hate poetry.

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Re: Being honest

Post by farmerjan » Sat Nov 09, 2019 8:26 pm

The hemp that most states are allowing to be grown, is the industrial hemp, that has no THC's (?), not the recreational, get high kind. Yes there are places that they can grow that, but in Va they have made growing hemp legal also, but you sure won't get anywhere by smoking it. It is for all sorts of industrial use, and there is the strains that they use for CBD oil and such. Still no hallucinating properties to it. There are quite a few that have signed up to grow it.

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Re: Being honest

Post by farmerjan » Sat Nov 09, 2019 8:39 pm

You are young enough to see a bad crash and then regain if things get better. It took me about 7-8 years to get back what I had lost. And at my age, I am not willing to have a big chunk of it disappear and not have the time to make it back. I do keep about 20-30 % in higher risk and have done okay, but not as good as they did back years ago. And I watch it pretty close. We only have a certain number of things we can invest in, offered through the company with the money I put into the retirement.

My employer also matches; up to 5% . Yep free money and I take full advantage of that. But if you are putting alot more into retirement that is not matched, then I think you still might be a bit better off, and SAFER, to get your debt paid down. Since I don't know your situation, I really can't say.... just an observation. I am very concerned that this market is going to make a pretty big correction. I will not lose the bulk of my money this time.
My "retirement" is/was going to be my cows. They have been as big a roller coastal ride as the stock market..... with the exception that I can always eat them and the cows will reproduce themselves ( for the most part).... so not a complete loss. Lost money on the market is lost.
Don't know your political affiliation, and not my place to judge.... but if half of the talk of all the far left socialist Democrats is anything near true....and they get into power..... you are going to want to have your money anywhere but where they can tax you at the outrageous rates they are proposing. And please don't be foolish enough to think that they will only tax the 1% of the 1% wealthiest. Those are the guys who are alot smarter than me, and they will be sheltered in every way they can be, they will move themselves and their money out of this country, and then it will start hitting the "well-off" to pay for all this stuff.... I just hope that it never gets to where they can just come in and take your land..... But if they tax it to the point where you can't pay it, (think Civil War -carpetbaggers etc.) it is just another form of "legal stealing"... Somehow, I am sure they won't be forgiving your debt though... because as long as you are struggling to pay it they are getting some money.

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Re: Being honest

Post by Jeanne - Simme Valley » Sun Nov 10, 2019 6:14 am

In NY, you have to show a GROSS income of $10,000/yr from farming to be farm exempt. Not sure where that falls into play with IRS taxes.
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