financial problems are burying us

Discussion in 'Homesteading Questions' started by myrandaandkids, Nov 28, 2006.

  1. myrandaandkids

    myrandaandkids Well-Known Member

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    and its mostly because we are working a farm that is too small to ever bring a profit, not to mention the fact that we are paying 9.9% interest on our home loan so we have high payments that are going up next year and will never be able to pay the place off, so we've come up with a possible sollution, has anyone ever applied for an fsa/usda low intrest farm opperational loan? tons of confusing headachy paper work and this is just the beginning, I am so frusterated right now and exausted.all of these codes and laws and permits and test are just rediculas! but if it works it will be worth it, it will financethe growth of our opperation, pay off all our other debt, and actually be lower payments and interest and be payed off sooner than our home loan. so anyone have experiance in this area? :shrug: :help:
     
  2. Chas in Me

    Chas in Me Well-Known Member

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    No experience there, but a wish for you that everything works out.
     

  3. marvella

    marvella Well-Known Member

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    i don't think borrowing money will help your situation, and might possibly make it worse. i see lots of advice on this board about how to cut back on living expenses so you can pay your debt off quicker.

    hope everything works out for you!!
     
  4. Judith

    Judith Well-Known Member

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    There are zillions of ways to cut back on your costs.
    Do you have an auto loan? Get rid of it. Buy a reliable beater.
    Do you have credit cards? Transfer them all onto a low interest card. ( that will give you a six month window of cheap interest) Get rid of the other cards. How much is the total interest that you pay on your current cards?
    No eating out Period. This one costs us over 300 per month and we didnt even know it was that high :rolleyes: We though we were having an occasion pizza, but if you added up our Tim Hortons morning coffees that was $10.00 per day for any days we went to work. Its a huge expense.
    Time showers (don't soak)
    Don't run a dishwasher.
     
  5. rambler

    rambler Well-Known Member Supporter

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    The paperwork is huge on those things. Fortunately I haven't had to deal with them.

    I believe you just wished to express some frustration here, and I sympathize with you.

    It would be interesting to know what size farm & what crops, and if you have outside income, and why your house loan is that high & going higher.....

    But all that is pretty personal info, and you will get some strange advise here from folks meaning to help but not really grasping the deal, and......

    Well, anyhow, that mountain of paperwork sure can be frustrating!

    If you are consolidating loans to a smaller monthly payment, or expanding your buisness to where it can make more income for you, good job. Hopefully you aren't just adding an additional loan.....

    --->Paul
     
  6. Hoop

    Hoop Well-Known Member

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    The answer to getting out of a hole is NOT to keep digging deeper. Rather than pouring more money into a farm, whose profitability is as uncertain as peace in Iraq, you should consider OUTSIDE employment.

    There are only two (2) ways to get out of debt. Earn more or spend less. Preferably both in unison. Try it.
     
  7. prairiecomforts

    prairiecomforts Well-Known Member

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    Check out the Ag mediation program in MN. They can give you some help and look our situation over and give you suggestions on what would be the best thing to do. It is free for the first 15 (I think) hours and they are really good at helping to put together a plan to help. Praying for you.
     
  8. Boleyz

    Boleyz Prognosticator, Artist

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    You should be able to get a lower fixed rate than 9.9%, unless your credit is really in the toilet. Call Ditech
     
  9. Terri

    Terri Singletree & Weight Loss & Permaculture Moderator Staff Member Supporter

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    I feel your pain. Between my husbands love of consumer goods and my love of homesteading, our payments are higher than they should be. We are just keeping our noses above water.

    It will be a great sense of relief for us when a car will be paid off in 4 months time. With good fortune and good maintenence, we will not have car payments for many years and we will be able to get ahead.

    Have you decided what you wish to raise? Pick-your-own blueberries and strawberries, perhaps? Some asparagus and bee hives as well? It is true that some "seed" money is needed to start a money-making operation.

    I have heard that in order to get a farm loan, you have to be able to show that you intend to make $1000 a year, but, I am in another state. I EXPECT that the extension agent in your state can give you good advice: he should know all about farm finance. While borrowed money MUST be paid back even when the crops fail, if you are paying 9.9 percent interest and the farm loan is for less, then, the difference in monthly payments would buy a lot of asparagus roots or berry bushes.

    It sounds like you are wanting an operational loan only, but, if you could get a fixed farm loan for less than your adjustable 9.9% mortgage it might give you enough breathing room.

    Especially since you can take the blueberry prunings, root them with rooting hormone, and turn them into new bushes.

    Since we only have 6 1/2 acres, my plans were HEAVY in the high-value crops, and I did a lot of the figures for a small operation. While my health is now too poor for me to fulfill my plans, I can dig up my figures if you are interested. I have average yields of high-value crops floating around here somewheres, and Morgan County Seeds does sell some lovely asparagus roots. My test planting had a 98% sucess rate after the first year.

    Again: *IF* you can lower your interest payments by 1% or more it might be a good idea to refinance your land. But, be VERY wary of increasing your debt, and only if the added debt is VITAL to your operation.

    Remember that tractor work can be hired done until that first crop is in and sold, so a tractor is probably not vital to start up with. And, a 6 acre wheat field shows little profit but a 6 acre asparagus field is HUGE!!!!!!!!! Lower your interest rate and payments, yes, but be wary of added debt!

    What sort of operation are you craving?
     
  10. comfortablynumb

    comfortablynumb Well-Known Member

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    if those are anything like a government 'mortgage assistance" laon program, I can tell you you are better off going to the mob.

    I had one for years and it was a nice "we can help" to start then they sprouted teeth and claws. they are no nice or helpful, nor do where their own [exaust port] is.

    the people who wrote the loan eventually left, the contracts CHANGED [oh yes they did... I have the originals and their copies the sent later... diffeent] and i the end, they are like any other debt, they come on as help and all they want is blood.

    if its all you can get...
    its all I had at the time, and i shoulda found a different way.

    I finally paid them off and told them what i thought of their kindness.
     
  11. Maura

    Maura Well-Known Member Supporter

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    I don't know what you are doing on your farm, but would it be possible to change what you are growing? Or how you are marketing?

    Instead of getting a loan, look for grant money.

    I like the idea of refinancing your present mortgage.
     
  12. mpillow

    mpillow Well-Known Member Supporter

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    To quote Dr. Phil...."How's that working for you?"

    Obviously there is some "thinking" in your financial plan that doesn't jive with reality....the reality may be that farming in your given circumstance isnt going to pan out.....but you may be able to keep a few animals and run a daycare cheaply off surplus eggs/meat/vegetables.

    Maybe your at the point where financially you cant have cake and eat it too. Accept it, do what you need to do to get rid of debt burden. Eat beans at home.
     
  13. Marilyn

    Marilyn Well-Known Member Supporter

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    Have you ever read Joel Salatin? He has proven exactly how to expand without debt. His writing just exudes common sense, it's a joy to read.
     
  14. Ramblin Wreck

    Ramblin Wreck Well-Known Member Supporter

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    Getting more debt is rarely the answer for getting out of debt; however, your current loan is at a much too high rate. If you can refinance and get a lower rate, that should help. The advice above about cutting costs and possibly looking for non-farm income is also prudent.

    Debt is like an anchor. If used properly, it serves a valid purpose. If used improperly, it can scuttle your boat and drown you. Take care and best wishes.
     
  15. EasyDay

    EasyDay Gimme a YAAAAY!

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    Myranda,

    It would help us to help you if you could give us a little more info about your farm, and what you do there. How much space do you have? What are you doing now that maybe you could change or enhance with no cost. Do you grow your own food... plants or animals?

    A little more info about your family, too. Are you a single parent? What are the ages of your kids?

    You don't need to get too personal, just some generalities, just a little more info that maybe some of us here can relate to and pass on some of our experiences, and how we managed.

    I agree with the consensus in not taking out another loan. It just doesn't make sense to try to handle your debts by incurring more.
     
  16. Terri

    Terri Singletree & Weight Loss & Permaculture Moderator Staff Member Supporter

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    She has a blog at http://findingserenityineveryday.blogspot.com/

    Apparently, she and her husband have 6 kids, 2 of which are disabled. She has goats and pot-bellied pigs, but she does not say how large her farm is. They have only had it for a year, however.

    Miranda, it sounds like you need patience and the ability to pinch pennies.

    Are your goats in milk? If so, look for recipies to use as much of it as you can. Bread pudding and custard and rice pudding comes to mind. If you use as much of it as you can, you will find that the kids seek out less of the other foods, so your grocery bill goes down. Also, bake bread for snacks. The kids will want fewer store-bought snacks if they eat warm bread once a week. The savings do not come from the bread: it comes from the other foods that they are not eating!

    Are you still struggling to keep your house warm?

    I KNOW how much 6 growing kids can eat!
     
  17. mtman

    mtman Well-Known Member

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    milk goats unless you have a dairy no money there go to meat goats and pot belly pigs to me they are just poop machine raise big pigs a little profit and a full freezer
     
  18. Country Doc

    Country Doc Well-Known Member

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    You're getting a lot of good advice. I will add if the business model is failing nothing will help unless you change it. I think it is extremely hard for most people to make it on a small farm with that income alone. Here you will find some that pull it off.
    I see many patients in bad jobs that leave them to open their own business. At least half of them fail and they are more broke than before. You may need a salaried job to support the farm. I look at mine as a way to get exercise, have some fun, and occasionally make some money. I might use it someday as a retirement income supplement.
     
  19. spam4einstein

    spam4einstein Well-Known Member

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    Sounds bad. Refinance is good if you get a better rate, but taking on more debt is a mistake and sounds like your plan. Not much money in PB pigs either. If she is paying 10% on a A.R.M. loan she got in the past 18months her credit score is bad... like in the mid 500's unles she got ripped off by the loan company. That means a few things.

    1) If her credit is good enough to get government loan then she got ripped off by the bank and therfore has poor financial skills. A sign this wont turn out well.

    2)If she found the best possible rate then she has bad credit and wont qualify for this new loan. That may be a good thing since the answer seems to be add extra income working OFF the farm.

    Im not trying to be rude, but in just this little post I got a huge smelly whif of very poor financial skills. Starting a profitable small farm is bad news for the average Joe and few pull it off....never mind at 10% financing. I think the only answer for thie person is to get outside employment, cut expenses, and saty away from loans before you loose it all!
     
  20. perennial

    perennial Well-Known Member

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    I would have to say look into refinancing for a lower interest rate - but DO NOT be sucked into more debt! I'm sure if your farm business doesn't make a good return, there would be some type of loophole for the govt. where maybe it then turns into a regular non farm loan or something. I'm very pessimistic when it comes to the govt. doing you favors - they DON'T!

    My suggestion is for one of you to look for
    employment off the farm - even if it's part time and only a bit of grocery money, it's still money coming in. I would then think about what special veggies - like asparagus or specialty you could grow for other businesses. You can then have someone plow the field for you to try it before investing in it or equipment. Pick one small thing and market it to businesses, etc. and then add if it's successful. Although you may not be efficient in the beginning, you will know for zero dollars and only your time vs. loans if it might work.

    I'm working on getting my home kitchen state approved so i can bake for restaurants, etc. here in our area as i'm already a baker for one. That will allow me to bake at home if needed for that job and then add other little jobs to make some more money. Anything you can start in your home without loans and investments is what you should do. My brother who sets up businesses for a living says he meets too many people who want to have
    their "own" business, but have no clue how to make money and figure out the market and just plow ahead and lose money. It was his advice to start at home - anything and then get into something bigger when you have success/need for your item.

    Our biggest bill besides our mortgage is our food - i have been working on slashing it, by not eating out, making everything from scratch again and it does make a difference and i only have 2 kids!

    Also, if you have farm animals it must cost to feed them as well. What about raising them for meet for YOUR freezer - then you don't have to buy meet - that is if raising them is cheaper than buying meat.

    Goodluck.