Welcome! Please use the navigational links to explore our website.
PartsASAP LogoCompany Logo Auction Link (800) 853-2651

Shop Now

   Allis Chalmers Case Farmall IH Ford 8N,9N,2N Ford
   Ferguson John Deere Massey Ferguson Minn. Moline Oliver

Tractor Talk Discussion Forum

Am I being wise, or stupid???

Welcome Guest, Log in or Register
Author 
Luke S

11-18-2006 07:34:25




Report to Moderator

I have been in a debate with myself for a year or so, and I think I am about to reach a decision, but I thought I'd seek out some advice here. To give those of you who don't know me a little background, I am 25 married for 6 years, have a steady job with good income as does my wife, we aren't rich, but paying our bills and saving some too. My wife is pregnent with our first child. We have a farm that is about 70 acres in east central Missouri, that we run our own horses and a couple cows on, and I bale hay for a hobby and for some extra income. I have about 50 acres of real good hay ground. This year I baled about 2000 square bales and had extremely good succes. Sold every bale of it no longer than 30 days after it was baled. I get $3.50 a bale for 50-55lb bales of orchard grass/fescue/clover mix and I sell only to the horse market. My mother is my biggest customer as she owns a big boarding stable in St.Louis and she feeds 5,000 bales a year. I have other smaller customers who want to buy from me as well. My problem is storage and handling of the small squares. I have a small barn loft that'll hold 400 bale's, but that is it. My propostion is to build a 40'x70'x15' shed that is closed in on two sides at first to save money, and maybe later I'll close in the other two sides if I want. I can get this shed built for about $8,000-9,000. I have enough savings to do it but I don't want to pull that much out because I think we need to have a good nest egg built up for when our baby arrives next spring. I have a very good banker, who will loan me the money to do it, and I can borrow it against my farm. I do not owe money on anything else, no vehicle payments, no credit cards, only my farm, which I currently owe about $155,000 on, and it is valued at about $310,000-$350,000. What am trying to decided is, is it wise to build this new shed to allow me to make more squares to sell. I could be my mothers exclusive supplier if I wanted, which would give me $17,500 income in sales the first year, seems like a good investment to me, as the value of the shed will only add to the value of my farm, and it will allow me to have more income also, and it'll give me a place to store some of my round bales also. Maybe this is all crazy, I don't know? If I had a shed that tall I could also get a New Holland bale wagon that would make my operation even more efficient and allow me to do more yet. My wife and I really like doing the hay, it is fun, we don't have to buy hay, and it can provide good income also. But I have a relative who constantly tells me how stupid I am for messing with hay, and that building the shed is not a wise use of money? Seems like a good investment to me? Should more than pay for itself the first year, and then it is just another paid for asset to my name? Am I thinking smart or have I lost it?

Thanks for listening.

[Log in to Reply]   [No Email]
Dug

11-19-2006 14:46:25




Report to Moderator
 Re: Am I being wise, or stupid??? in reply to Luke S, 11-18-2006 07:34:25  
Sounds like you are doing quite well for yourself at a very young age, Congratulations! Wish I would have had my head on straight at that early of an age...

If you decide to build the building, look at it from this this perspective: If you already had a hay shed sitting on your land worth $8,000, would you borrow $8,000 against it and put it in the bank?

Good luck!

Dug



[Log in to Reply]  [No Email]
cannonball

11-19-2006 06:53:59




Report to Moderator
 Re: Am I being wise, or stupid??? in reply to Luke S, 11-18-2006 07:34:25  
Borrow and put your savings up for collateral, most of the time it will cost you about 2% above what they are paying you, or it does me.....

MAY GOD BLESS THE USA



[Log in to Reply]  [No Email]
Don L C

11-18-2006 17:07:23




Report to Moderator
 Re: Am I being wise, or stupid??? in reply to Luke S, 11-18-2006 07:34:25  
In your case ,its a no brainer..... build it!



[Log in to Reply]  [No Email]
old bones

11-18-2006 15:29:15




Report to Moderator
 Re: Am I being wise, or stupid??? in reply to Luke S, 11-18-2006 07:34:25  
just a thought. have you considered talking to your "biggest customer" about a loan, trading for hay? might be worth considering. then you won't have to put it on your mortgage. of course, you would have to get the paperwork in order, with terms, interest rate, value of your product, etc. like i said, just a thought.
old bones
p.s. sometimes doing business with family can lead to bad feelings, but everybody has a different situation.

[Log in to Reply]  [No Email]
B-maniac

11-18-2006 14:02:02




Report to Moderator
 Re: Am I being wise, or stupid??? in reply to Luke S, 11-18-2006 07:34:25  
Not being negative here,just a few questions to ask yourself. You say you get 2000 small bales a year off your 50 acres,right? You say it was all sold within 30 days of baling. What is the "new" barn going to do to make you money the rest of the year. If the hay sells that quick and your mother is a guaranteed sale also,then I don't see any hay in your posession from Sept. to May. The harvest til sale time is so short that I don't see where covering it with sheet plastic wouldn't be practicle. If you get more acres to bale so you could be the sole supplier to your mother (5000 bales)then I could see building the barn because you would have to store her winter usage. As it is you can store 400 bales in the barn and stack and cover the rest,but in your own words,it will all be gone in 30 days! Where's the need for a large barn that will have no hay in it for 6 to 8 mos. of the year? Still pay taxes on it all year. My opinion on the issue is this; If you want the barn for other things , that is fine. If the short term summer hay storage is , in your mind, sufficient to pay for this barn then fine. I say go ahead and build it. If the short term hay storage is the only issue.then I say there are a lot better and cheaper solutions to it.
The other question I have is this. You state that if you had the barn , it would "allow" you to make more square bales to be your mothers sole supplier and make $17,500. You have 50 "good hay acres. You make 2000 bales a yr. Where are the other 3000 bales comming from to make the 5000 that your mother uses? The $7000 a yr. (gross) that you are now selling does not afford a barn,nor in my opinion need it. Don't build on "projections" in farming. If you are guaranteed 5000 bales from somewhere , build it. By the way,I also applaud you at your age for the progress you have made.Good luck with the pragnancy and the new baby when arrives. Life will change,but for the better,you will see. Good Luck.

[Log in to Reply]  [No Email]
Luke S

11-18-2006 14:10:35




Report to Moderator
 Re: Am I being wise, or stupid??? in reply to B-maniac, 11-18-2006 14:02:02  
Maybe I should have been more clear. I baled 2,000 small squares this year off of only 10 acres of my total 50. 1,000 bales first cutting, 700 bales second cutting, and 300 bales third cutting. The remainder of my 50 acres I round bale, I then use some of those to feed my own stock, and sell what is left of the rounds. If I had a place to put more square(a shed), I could bale a lot more of them, and sell them through the fall and winter instead of selling what little I had all at once. Also, I'd like to store some of my rounds inside, as well as a piece or two of equipment that I don't have room for now in the shed I all ready have.

[Log in to Reply]  [No Email]
B-maniac

11-18-2006 14:15:15




Report to Moderator
 Re: Am I being wise, or stupid??? in reply to Luke S, 11-18-2006 14:10:35  
***BUILD***



[Log in to Reply]  [No Email]
dr.sportster

11-18-2006 13:37:07




Report to Moderator
 Re: Am I being wise, or stupid??? in reply to Luke S, 11-18-2006 07:34:25  
Maybe you should ask:is this relative wise or stupid.Relatives usually give me annoying advice that is good to do the opposite.



[Log in to Reply]  [No Email]
Gene Davis (GA)

11-18-2006 20:14:07




Report to Moderator
 Re: Am I being wise, or stupid??? in reply to dr.sportster, 11-18-2006 13:37:07  
Take this advice to the relative; Forest Gump said; "stupid is as stupid does". he was considered stupid, but look what taking a chance did for him in the movie!



[Log in to Reply]  [No Email]
Bob in WY

11-18-2006 11:27:22




Report to Moderator
 Re: Am I being wise, or stupid??? in reply to Luke S, 11-18-2006 07:34:25  
Not advice but what I tend to do on things like this is setup a 3 to 5 year loan with no prepay penality. Borrow enough to make sure the project will take care of at least my 5 year plans. If everything goes according to my initial plans then I pay off early. If I end up with a glitch then I don"t put myself into a cash crunch.

The last machine I did this with was $120,000. I could have paid cash but it would put my cash on hand below my comfort level so I setup a 5 year loan. The machine actually did better than expected so I paid it off in 1 1/2 years. Doesn"t always work that way though.

[Log in to Reply]  [No Email]
T_Bone

11-18-2006 11:13:47




Report to Moderator
 Re: Am I being wise, or stupid??? in reply to Luke S, 11-18-2006 07:34:25  
Hi Luke,

Since you asked, here's my comments on what you posted.

First, I'm very impressed at your age of how well you've done, congrats to you and yours, however one sentance bothers me.
" and I can borrow it against my farm." I would give this statment a very long look before jumping on that idea for any reason. Never put your "home" at risk to make money.

Your getting close to having a heavy expense, the new baby, before the new "expected" income is actualy earned. $9k sounds like alot but boy do baby's cost. Most just figure we will afford them somehow and we do. If we knew what we know now, none of us could afford to have children. lol
Will the wife still be working after the new baby arrives?

You stated both you and the wife work with only the mortage as debt. Can and why haven't you been living on one income and banking the other pay check? I'm not looking for answers but just putting questions out there for you to answer to yourself.

Example:
We've been totaly debt free for 35yrs but yet my monthly expense for replacement of vehicles, tires, Insurance, tags, house repair, appliance replacement (includes carpets and such), gifts, and property taxes runs us $1050/mth. Most of the expenses are a yearly one time cost.

The "kitty" at 3yrs old for the above items stands current at about $19k in savings, (mutual fund earning about $42/mth). Due to inflation, that will now have to be $1150/mth come 1/1/07. I figure replacing a car at 10yrs and my pick-up at 15 to 20yrs since were retired.

The other most single important item that helped us was to buy a puter money manager program. I like Quicken Basic but MsMoney is also a good one. I track every nickle that we spend. Not that I'm a penny pincher but it helps knowing just how much I'm wasting and what on or how come I'm short. If you've never done this, you will be shocked on where you've spent your money and how much you spent on stupid stuff.

The next best thing I did in the past 10yrs is get BOA on-line banking with bill-pay. I really don't know how I ever got along without those two items :)

BTW, finance markets are saying in most places realestate prices will drop by 20% in the next couple years.

T_Bone

[Log in to Reply]  [No Email]
JRM

11-18-2006 10:27:00




Report to Moderator
 Re: Am I being wise, or stupid??? in reply to Luke S, 11-18-2006 07:34:25  
You cash flow looks good for this project and you could concieveably pay it back in one year. Pretty much makes it an easy decision.

As for your relative"s advice - is he a very sucessful person thus showing good business sense so that you can justify taking a second and third look at your numbers? Does he have a specific reason for telling you not to proceed? Or, is he just getting by - possibly due to letting to many good opportunities slip through his fingers?

[Log in to Reply]  [No Email]
Larry NE IL

11-18-2006 10:12:32




Report to Moderator
 Re: Am I being wise, or stupid??? in reply to Luke S, 11-18-2006 07:34:25  
You have all the ingredients for success. With a solid buyer in your mother, I wouldn't hessitate on getting going with the project. My only suggestion would be to look closly at your future operation. Is the building big enough? Now is the time to do it right.
Larry NE IL



[Log in to Reply]  [No Email]
oldcraneguy

11-18-2006 09:48:43




Report to Moderator
 Re: Am I being wise, or stupid??? in reply to Luke S, 11-18-2006 07:34:25  
Luke, It sounds like you know what you want to do and I think its a good idea too but if I were you I would use the money Ive got saved and put off borrowing as long as possible, remember rule of 78 financing, you startout paying almost all interest and even at mid-term of the loan your payment is still half interest! If you use your cash on the bldg, you can always borrow money if you need to for the blessed event and maybe in a position to repay it quicker with the extra hay $ the bldg will generate, therefore paying less in interest. Also be forewarned the "Credit lines" can be great for emergencies but Ive found (the hard way) that they can be just a little TOO convient and before you know it you dont have near as much equity as you thought...just my 2 cents worth

[Log in to Reply]  [No Email]
Mike (WA)

11-18-2006 09:26:27




Report to Moderator
 Re: Am I being wise, or stupid??? in reply to Luke S, 11-18-2006 07:34:25  
You have to remember, you're on a tractor board, and most of us will build a shed at the drop of a hat, for no better purpose than to shelter old tractors that we probably should never have bought in the first place. To actually have a sound economic reason for the building is icing on the cake, and your reasoning certainly seems sound to me. You're getting a very good price for your hay, with a built-in market, and you enjoy it to boot. Go for it.

My first thought as I was reading your post was to advise you to build it high enough so you could use a bale wagon, but you were way ahead of me. You'll find that getting the hay off the field is the "bottleneck" when you get bigger, and I'd think seriously of trying to add the balewagon as soon as you can.

Finally, as to Uncle Negative Ned, follow your own instincts. As I look back over my 58 years, most of my regrets are that I didn't pursue opportunities when they arose. Chronic naysayers should be tolerated to maintain family harmony, but seldom heeded.

[Log in to Reply]  [No Email]
Billy NY

11-18-2006 09:17:05




Report to Moderator
 Re: Am I being wise, or stupid??? in reply to Luke S, 11-18-2006 07:34:25  
Sounds like a plan. Think about it, small enough where you're not into a major operation where you have to keep lots of late model equipment field ready, also have the extra paid help. I think it's reasonable to assume that if you have decent equipment and like many of us, doing maintenance and repairs for something at this scale is at least managable, and not cost prohibitive or takes too much time. With that in mind you probably could maintain the size of what you are doing now, keep those fields taken care of, with the right weather, you do stand a chance of making some nice quality hay. And although many people hate handling small squares, myself included, I still enjoy it to some degree, ( as long as I'm not stuck in a hot sticky loft or mow LOL ! ) you get a good work out and know what hard work is, especially to put up a few thousand.

I can understand that size operation, as I grew up on our horse farm, and we never bought hay, except in the beginning. We painstakingly baled what we needed which was a few thousand a year, and I did my share of stacking when I got old enough. I always enjoyed the work, but sometimes that equipment baler or mower conditioner could be a pain to keep running, but it goes with the turf. We were fortunate in that we also were a Ford Tractor & Equipment dealer for many years, helped with keeping our equipment going, but even with the best equipment no matter who made it, that weather was always on you, threatening, so many times getting it done just under the wire. We had 2 giant barns, could take a lot of hay, more than we ever baled to fill them both, but I'll tell you having that space was really nice, one was a drive through, could park 4 wagons in that area alone.


Dear old dad & stepmom still maintain a fair amount of horses, as many as 40, on another 50 or so acres and I do haul hay to them from here about 30 miles away, from our long time farmer friend and neighbor who still puts up quite a bit, even though the cows are now gone. They use a few thousand bales every year and lately it's just the worst darn hay I ever recall seeing, weather just won't cooperate, you need to get it down and dry fast, if you can't do that, you don't get the dry time, rain, rain, rain, never ends lately, but I'd rather deal with it then a drought.

That seems reasonable for a size shed like that, if it's put up by others, possibly you are putting it up ? With what you are doing, you need it, there is no doubt, get past equipment, weather and help, you got good hay to get inside. If you borrowed, and got it done, you just have to make good on your plan, pay it off with the income from both your jobs and the hay.

Now if you want to be creative, use your imagination a bit, ask for advice from people, and see if there are any 2nd hand buildings available, materials available, I see things I could re-use all the time around here and having spent a solid 16 years in the construction industry, it helps as you see things that are valuable materials, going for waste, there is a lot of waste in this country. Depending on what you may find, what kind of taste for buildings you have and how hard you want to work to save some $$ you may find something out there that will help you immensely, but if you are going to be serious and know up front you will be doing this hay operation, and will depend on the $$ from the sales, you may just want to get it done, and deal with the numbers. Sounds like you are doing well and at your age you ought to be commended for these accomplishments, takes a focused person to be successful, especially at a young age. Sticking to a plan sometimes ain't easy, but when you push yourself through, getting it over sometimes is the best course in my opinion, next season you could be ready with a building, in the interim, see what else you could do to also build up those extra funds for that young one headed your way, I'll bet you could make it work, working hard, longer hours for extra dough, for a certain amount of time, may seem like an eternity, but when said and done, it's a nice accomplishment.

[Log in to Reply]  [No Email]
paul

11-18-2006 09:11:39




Report to Moderator
 Re: Am I being wise, or stupid??? in reply to Luke S, 11-18-2006 07:34:25  
Sounds like you have good research & have thought to the future, not to 'just get by'.

I think you will do good making _your_ decision on this.

Good to listen to others & get ideas & thoughts.

But you don't need to listen to every relative.... ;)

Have fun with your hay business in your new barn, I think you have good odds of doing well. :)

--->Paul



[Log in to Reply]  [No Email]
kyhayman

11-18-2006 08:50:10




Report to Moderator
 Re: Am I being wise, or stupid??? in reply to Luke S, 11-18-2006 07:34:25  
I've got a few of those relatives too. There's no reasoning with them. Main thing I have noticed is the ones that have the most advice to give have the least to show for it.

Ignore them and build. Thats what I did 15 years ago. The hay business has always been good to me. One reason I hate thinking about giving it up.



[Log in to Reply]  [No Email]
Greg C

11-18-2006 08:31:42




Report to Moderator
 Re: Am I being wise, or stupid??? in reply to Luke S, 11-18-2006 07:34:25  
Sounds like you've done your research. Another option is to locate a building that someone wants torn down.I've been able to purchase 3 in the last 3 years. I've got a 30x60 machine shed, an 18x60, and a 24x72. The 24x72 is steel frame. So far my total cost including new tools and extra lumber, concrete etc. is roughly $3800. Remember, you can use tarps to cover your walls until you can afford tin or wood. Sometimes you have to improvise to save some coin.

[Log in to Reply]  [No Email]
Rauville

11-18-2006 08:31:32




Report to Moderator
 Re: Am I being wise, or stupid??? in reply to Luke S, 11-18-2006 07:34:25  
A wealthy business owner from Cherry Hills, NJ once told me: "If you're in business and you aren't growing...you're dying!"
I don't see where you could go wrong making a capital improvement that would pay for itself.



[Log in to Reply]  [No Email]
Midwest redneck

11-18-2006 08:19:18




Report to Moderator
 Re: Am I being wise, or stupid??? in reply to Luke S, 11-18-2006 07:34:25  
One way to think of it is will the shed be paid for from the Hay business in 2-3 years. When I was a maint. manager at a mid-size company the plant controller would always say to me if I wanted to spend a dime, "will the investment be paid for in 2-3 years" Food for thought.



[Log in to Reply]  [No Email]
Allan In NE

11-18-2006 08:03:12




Report to Moderator
 Re: Am I being wise, or stupid??? in reply to Luke S, 11-18-2006 07:34:25  
Luke,

It took me 53 years to learn this trick:

Do exactly opposite what the other guy(s) tell ya; it will make you money every time.

Allan



[Log in to Reply]  [No Email]
Ollie3

11-18-2006 16:28:46




Report to Moderator
 Re: Am I being wise, or stupid??? in reply to Allan In NE, 11-18-2006 08:03:12  
Allan..then why do you always ask questions on yesterdays tractors...just trying to find out how stupid people are according to you?????



[Log in to Reply]  [No Email]
Allan In NE

11-19-2006 07:39:29




Report to Moderator
 Re: Am I being wise, or stupid??? in reply to Ollie3, 11-18-2006 16:28:46  
Ollie,

You are reading me wrong.

Luke refers to a relative that is always calling him stupid for messing with the hay.

This is the joker I was talking about; the nay-sayers. They never give good advice.

Allan



[Log in to Reply]  [No Email]
Luke S

11-18-2006 08:10:36




Report to Moderator
 Re: Am I being wise, or stupid??? in reply to Allan In NE, 11-18-2006 08:03:12  
That is interesting advice!



[Log in to Reply]  [No Email]
Janicholson

11-18-2006 07:53:59




Report to Moderator
 Re: Am I being wise, or stupid??? in reply to Luke S, 11-18-2006 07:34:25  
I would seak a cooperative venture with local technical schools/colleges that might need a live project for educational purposes. Often the only cost will be the materials. Just a thought. (I assist in that type of projects for my students often) JimN



[Log in to Reply]  [No Email]
Gene Dotson

11-18-2006 07:53:17




Report to Moderator
 Re: Am I being wise, or stupid??? in reply to Luke S, 11-18-2006 07:34:25  
Luke
I think your reasoning is very sound. You know what you want and where you want to go with it. You have a good market, a good product and with the new barn you will have the means to control your marketing.
You have the advantage of youth on your side and you will never suffer from good assets.

Bottom line? Listen to your own feelings and pay no attention to the pessimistic relative.... Gene

[Log in to Reply]  [No Email]
msb

11-18-2006 07:45:37




Report to Moderator
 Re: Am I being wise, or stupid??? in reply to Luke S, 11-18-2006 07:34:25  
Sounds like a good idea to me.Think of what you might lose if you lost only one cutting of hay if it got wet and stayed wet.You might even want to think about some sort of drier so you could bale the hay a little wetter and lessen the chance of the hay getting wet.



[Log in to Reply]  [No Email]
MN Bob

11-18-2006 07:45:04




Report to Moderator
 Re: Am I being wise, or stupid??? in reply to Luke S, 11-18-2006 07:34:25  
Luke; In the end it will be your wife and you that have to decide. Sounds like you have a relative that is either jealous or a negative person. Some people are so afaid of a risk they nay say everything. Since you have a market, and cash, I would say go for it. I would also use some of the money from the savings and take a PERSONAL note from the banker. No 2nd on the farm. Maybe wait a year or two for the bale wagon so everything else is paid for and a down payment saved out of hay sales. just my thoughts. Bob

[Log in to Reply]  [No Email]
Luke S

11-18-2006 07:49:44




Report to Moderator
 Re: Am I being wise, or stupid??? in reply to MN Bob, 11-18-2006 07:45:04  
Bob, your right, this relative of mine tends to be pretty negative. I was thinking the same thing about the bale wagon, maybe wait a little while after the shed and some more money has come in, unless I find one that is a steal and can't pass it up?



[Log in to Reply]  [No Email]
Coloken

11-18-2006 07:44:16




Report to Moderator
 Re: Am I being wise, or stupid??? in reply to Luke S, 11-18-2006 07:34:25  
I think you answered it yourself when you said "My wife and I really like doing the hay," Sounds to me like you are both into it.



[Log in to Reply]  [No Email]
Luke S

11-18-2006 07:52:10




Report to Moderator
 Re: Am I being wise, or stupid??? in reply to Coloken, 11-18-2006 07:44:16  
We both enjoy it a lot. It is something we can do as a family, and my uncle and his two sons who are 6 and 7 help us as well, and they really like doing it. Really seems like we are closer as a family after spending a day working together out in the 95 degree temps, and in about another 5-7 years, those two cousins of mine are gonna make some good hay help!



[Log in to Reply]  [No Email]
John e.c.MI

11-18-2006 17:36:36




Report to Moderator
 Sell the horses, build the shed in reply to Luke S, 11-18-2006 07:52:10  
Make sure it is high enough to accomodate any bale wagon you might have in the future. Build it so you can ad on later.



[Log in to Reply]  [No Email]
[Options]  [Printer Friendly]  [Posting Help]  [Return to Forum]   [Log in to Reply]

Hop to:


TRACTOR PARTS TRACTOR MANUALS
We sell tractor parts!  We have the parts you need to repair your tractor - the right parts. Our low prices and years of research make us your best choice when you need parts. Shop Online Today. [ About Us ]

Home  |  Forums


Copyright © 1997-2023 Yesterday's Tractor Co.

All Rights Reserved. Reproduction of any part of this website, including design and content, without written permission is strictly prohibited. Trade Marks and Trade Names contained and used in this Website are those of others, and are used in this Website in a descriptive sense to refer to the products of others. Use of this Web site constitutes acceptance of our User Agreement and Privacy Policy

TRADEMARK DISCLAIMER: Tradenames and Trademarks referred to within Yesterday's Tractor Co. products and within the Yesterday's Tractor Co. websites are the property of their respective trademark holders. None of these trademark holders are affiliated with Yesterday's Tractor Co., our products, or our website nor are we sponsored by them. John Deere and its logos are the registered trademarks of the John Deere Corporation. Agco, Agco Allis, White, Massey Ferguson and their logos are the registered trademarks of AGCO Corporation. Case, Case-IH, Farmall, International Harvester, New Holland and their logos are registered trademarks of CNH Global N.V.

Yesterday's Tractors - Antique Tractor Headquarters

Website Accessibility Policy