Loan or grow?

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Stocker Steve
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Re: Loan or grow?

Postby Stocker Steve » Sun Feb 04, 2018 11:23 am

Good posts. I like to use the U of Kentucky "Bred Heifer Profitability" spreadsheet. In my numbers cow depreciation becomes a huge deal - - so recently I have been rebalancing my "stocking rate" by selling some (common) stock and buying back some (cattle) stock that can appreciate.

Once you have confidence you can consistently make a profit then a little leverage is a good idea. :cboy: I was pretty confident till 2015/2016. Bud would say I was not making enough turns.
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Re: Loan or grow?

Postby Coosh71 » Tue Feb 06, 2018 8:15 am

I have read every post in this thread and really enjoyed reading it all. There's a ton of knowledge on this site and that's why I enjoy it so much. There are successes and failures in either approach you decide to take (loan vs grow slow). I agree with one post that sticks out to me, about growing slow and learning as you grow. It's much easier to swallow losing 1 or 2 head because of a blunder vs 25. A neighbor bought 50 hd of nice Black Angus bred heifers a few years back just a couple months before prices took a big drop. With what he paid for heifers vs his return in first calves (with a lower market) and the loss of 12 that didn't breed back he was pretty deflated. He paid his bank not but it was a wash. Took 3 years to make it pencil out right. Also after 3 years he had 29 of the original 50 remaining in his herd. I guess my take is that if he had bought (with cash) 10-15 mid aged cows/year, he would have been a whole lot better off after those 3 years.
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Re: Loan or grow?

Postby bird dog » Tue Feb 06, 2018 8:56 am

Coosh71 wrote: I guess my take is that if he had bought (with cash) 10-15 mid aged cows/year, he would have been a whole lot better off after those 3 years.


Gaining experience is expensive in this business. You can save a bundle learning from other peoples screw ups. Stay with it long enough and you will have your share of stories to tell someone else how dumb you were. No one is immune from the dumb mistake disease.
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Re: Loan or grow?

Postby Jrebyank » Mon Feb 19, 2018 8:52 pm

I have decided not to take out a loan. I will just continue to buy a few cows/heifers per year and keep what I can. Thanks for all the advice I really appreciate reading and learning from people all over the country.
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Re: Loan or grow?

Postby True Grit Farms » Mon Feb 19, 2018 9:20 pm

Thanks for the follow up, there's no wrong answer to your question. You'll get there before you know it.
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Re: Loan or grow?

Postby Nesikep » Wed Feb 21, 2018 2:06 am

years ago I bought a car, but since it was older, no one would give me a payment plan on it.. I had a good job at the time so I just got a line of credit from my bank for $20k.. Paid it off in a year, then bought my truck on it... Interest may be a little higher than a loan, but there's no set repayment time, and you can just "shuffle" money around to make a payment if you need to.. and meanwhile you're also building up credit rating.. I had to provide proof of income (paychecks), but didn't need to put up collateral.
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Jeanne - Simme Valley
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Re: Loan or grow?

Postby Jeanne - Simme Valley » Wed Feb 21, 2018 9:05 am

Basically, that's what I do. I have a line of credit with FB. I can spend money on anything. Just call, they wire transfer to my checking acct. They have NEVER had any collateral.
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Re: Loan or grow?

Postby Brute 23 » Wed Feb 21, 2018 10:59 am

I have a line of credit at my bank also... It's called a savings account. When I want to borrow money I just just transfer money in to my checking account. I make a repayment plan with myself and pay the loan back to myself monthly.

It has worked good so far. The guy making the loan is pretty sharp and laid back so we get along well. :)
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Re: Loan or grow?

Postby TexasBred » Wed Feb 21, 2018 11:48 am

Brute 23 wrote:I have a line of credit at my bank also... It's called a savings account. When I want to borrow money I just just transfer money in to my checking account. I make a repayment plan with myself and pay the loan back to myself monthly.

It has worked good so far. The guy making the loan is pretty sharp and laid back so we get along well. :)

Charge yourself an interest rate that you and the lender can agree on and increase your interest income. ;-)
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Brute 23
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Re: Loan or grow?

Postby Brute 23 » Wed Feb 21, 2018 12:36 pm

TexasBred wrote:
Brute 23 wrote:I have a line of credit at my bank also... It's called a savings account. When I want to borrow money I just just transfer money in to my checking account. I make a repayment plan with myself and pay the loan back to myself monthly.

It has worked good so far. The guy making the loan is pretty sharp and laid back so we get along well. :)

Charge yourself an interest rate that you and the lender can agree on and increase your interest income. ;-)


Yup. It's amazing what taking a pro-active stance to money does to you life rather than being re-active.
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Re: Loan or grow?

Postby TexasBred » Wed Feb 21, 2018 12:41 pm

Brute 23 wrote:
TexasBred wrote:
Brute 23 wrote:I have a line of credit at my bank also... It's called a savings account. When I want to borrow money I just just transfer money in to my checking account. I make a repayment plan with myself and pay the loan back to myself monthly.

It has worked good so far. The guy making the loan is pretty sharp and laid back so we get along well. :)

Charge yourself an interest rate that you and the lender can agree on and increase your interest income. ;-)


Yup. It's amazing what taking a pro-active stance to money does to you life rather than being re-active.

Until you need more than you got then you have to do business with the evil banker or pass up the opportunity.
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Brute 23
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Re: Loan or grow?

Postby Brute 23 » Wed Feb 21, 2018 2:03 pm

It's one thing to do it to expand or purchase an asset... It's another to do it to operate.
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