# Debt



## KS John

Debt is never good!

https://www.reuters.com/article/us-usa-farms-perdue/u-s-farm-debt-soars-to-levels-seen-during-1980s-farm-crisis-agriculture-secretary-idUSKCN1QG24Y


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## Farmerbrown2

I don’t believe in lending money to farm but I have bought two pieces of equipment now with zero percent financing. Twice now I have gone to buy equipment and been told same price cash or finance. A big part of the problem is dealers and bankers encourage us to borrow money.


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## swmnhay

Debt is a tool.A tool that needs to be managed.Some can manage it some can't.

So many think if they can get the money or ok'd to get a loan it's ok to buy it.


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## BWfarms

Debt is okay. It's when you don't make calculated risks that gets you in trouble. Something I like to do is only use a credit card to purchase goods. I rack up points for cash back or air miles... freebies as long as you pay the full balance before the end of the month. Another plus is I protect my bank account from fraud and my funds are never frozen when there is a dispute.

I don't bat an eye when financing equipment. I'm small by standards but have carried 3-4 pieces on loan and the occasional deferred payment for 6 months. Currently I only have the yearly tractor payment.

While I like to be ahead and not chase payments, I do know the value of having cash on hand gives me better purchasing power. If I have to put a down payment on something, I usually put the minimum. When you give the institution your cash, you know longer have leverage to invest more. Sometimes interest is okay as long as your profits exceed the incurred interest. My operating expenses are currently paid for funds on hand, zero yearly operation loans.

An opportunity is going to arise due to an inheritance. Wife's father wants to pay her and her sisters' student loans off. I suggested that he gift the money and allow each family to apply it where they see fit. Well at least in our case, we are the only ones wanting to use the money to make more money.


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## Vol

One can use debt wisely...but it is a challenge for most. There is much less worries with paying cash, but the climb to get there can be very slow sometimes.

Regards, Mike


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## Farmineer95

If an equipment manufacturer finances their or other equipment, it should tell us something. Deere makes the majority of profits by financing equipment. Just another level of vertical integration. Interest is another cost to do business the way I see it.


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## JD3430

Claas had like 1% for 4 years on the rake I bought last summer. I took it.

I figured all the money I'd have tied up in the rake could be in a 2.5% 15 month CD, or available for an unexpected repair.


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## Vol

Farmineer95 said:


> If an equipment manufacturer finances their or other equipment, it should tell us something. Deere makes the majority of profits by financing equipment. Just another level of vertical integration. Interest is another cost to do business the way I see it.


I will say this about Deere, they have some of the most favorable interest rates in the industry. They will basically finance other brand named equipment that is sold at the Deere dealerships just the same as they do their equipment.

Regards, Mike


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## Farmerbrown2

Vol said:


> I will say this about Deere, they have some of the most favorable interest rates in the industry. They will basically finance other brand named equipment that is sold at the Deere dealerships just the same as they do their equipment.
> 
> Regards, Mike


 That depends on which JD dealership you deal with . There is a JD dealer 60 miles north of me that I have bought from that gave me 0% finance on used NH equipment. My local JD dealer told me that is impossible JD financial would never do that. This is why I own a Claas rake now.


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## r82230

Farmerbrown2 said:


> That depends on which JD dealership you deal with .


In my area it is: "That depends upon which ______ dealership you deal with", any color has good and not so good dealerships. IMHO,some want your business, some DESERVE your business.

Larry


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## Vol

If you have a Deere Multi-use account, Deere may offer you equipment specials by email. You take those to the dealer with you and show them if you agree upon a price. Or Deere may offer you more competitive interest rates on input purchases like seed and fertilizer purchases or delayed repayment of inputs.

Regards, Mike


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## RockmartGA

As I said in another thread, debt is a lot like fire. Used wisely, it can do great things. Used unwisely, it has the power to destroy.


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## Mf5612

My dad,now 80 was able to farm with cash. He bought good used equipment and put the difference into more land ,milk quota and tile drainage.ive had lots of debt but not so much that it is manageable.ive seen guys buy too much iron and lose it all.i think debt is a big problem in general nowadays.too many dollars borrowed at the swipe of a pen and very little thought put into how you pay it back.


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## WandaRobertson

Loans are good when you have a good business idea and when you know you will have to earn from it to pay off debts. Otherwise, I can't even imagine starting a business from scratch, and agriculture requires investment. And my father started running the farm with small steps. He took loans from Lainojen yhdistäminen 65000 € - Yhdistä 65000 € lainat yhdeksi! to buy the equipment. He started with a tractor and already has about five vehicles. Things are going well because he invests the money wisely, and he doesn't take more loans than he can pay.


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## Arthurol

Don't go into debts if you're not totally sure you can repay them in full in time!


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## seventyfourci

I could not wait until I could just pay cash and never borrow a dime. 20 plus years ago because of my job in the oil industry I made it to that point and after paying cash for everything from new pickups to land I decided I wanted to make a land deal that I could not pay cash for and low and behold a kid getting out of high school has a higher credit score than I do. Paying cash can become a problem for your credit score.


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## IH 1586

seventyfourci said:


> I could not wait until I could just pay cash and never borrow a dime. 20 plus years ago because of my job in the oil industry I made it to that point and after paying cash for everything from new pickups to land I decided I wanted to make a land deal that I could not pay cash for and low and behold a kid getting out of high school has a higher credit score than I do. Paying cash can become a problem for your credit score.


Nothing like doing everything right and being penalized for it.


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## seventyfourci

AMEN IH Last time I checked the bank said they did not understand it was zero. Hell if I had some bad debts I would have a higher credit score. I know a guy with 2 repo's in 5 years and his score is higher than mine. I guess I will continue to pay cash, like I have a choice!


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## sea2summit

seventyfourci said:


> AMEN IH Last time I checked the bank said they did not understand it was zero. Hell if I had some bad debts I would have a higher credit score. I know a guy with 2 repo's in 5 years and his score is higher than mine. I guess I will continue to pay cash, like I have a choice!


Don't worry, as soon as they start a social credit score like China you'll probably have matching scores


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## danwi

Have to get a credit card and use it each month for gas and groceries and then pay the balance each month, that should help, won't cost anything.


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## seventyfourci

When I was 14 I started borrowing money at the bank 90 dollar 90 day notesthen it was 300 dollar 90 day notes kept the money a couple weeks go in and give the bank the same money they gave me pay a couple dollars interest maybe. By the time I was 18 I was buying wheat pasture calves a truckload at a time and driving a new truck to school my senior year. Now I am a senior and could not buy a pair of boxers on credit. I do not have the will nor the desire to do all that again. That is why I said I GUESS i WILL PAY CASH OR I JUST DO NOT NEED IT.


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