Budget It In – Where Farm & Ranch Operators Start

by | Dec 14, 2015 | 0 comments

Farmers live in the unknown. When they are asked to purchase anything they have to sit down and punch the numbers to see how it will work from year to year. We all know that there is no guaranteed paycheck at the end of the year.

I’m personally familiar with that way of life and in my professional life, I work hard to educate my fellow farmers and ranchers.

When farmers learn of the Farming Without the Bank concept their first question is,  “Where do I find the money to get started?”  I have found through conversations with those interested in a new farm finance option that we were able to find several places to look for money that was already coming into their operation or leaving their operation. All we did was redirect it.

Annual Expenses

In most cases, there is money there to get started but even then I hear, “Mary Jo, I may not have the money every year.” Yes, I know the concern. What needs to be taken into consideration is how is anything afforded from year to year? The expenses are put into the operating budget. None of these year to year numbers come as a surprise, because farmers know they are coming and plan accordingly.

This concept is no different, it’s planned for by adding it to the operating expenses. Life insurance is not something that a farmer can go without. It’s needed for the spouse, kids, and banker. Yes, the banker wants you to have some death benefit that will cover your expenses should you pass away. It’s truly the most secure collateral they can get, no one outlives death.

Farmers have to pay for health insurance out of their pocket and we all know that is not cheap. It doesn’t matter the profits for the year, farmers find a way to pay for it, it’s necessary. It’s part of your operating expense. Some may have an off-the-farm job that pays for this but if the goal is to farm full time it will become part of the expenses and that has already been considered. This is no different, it’s necessary and should be part of those expenses.

Money Is NOT Lost

The one thing most farmers miss is the fact that this money is NOT lost, it’s usable! Stop thinking as if the money paid for death benefit is lost forever, at some point that is not the case. Grab your book and review page 68. You will see in the first two years he didn’t have access to all of the money paid in. Some went to death benefit but look at year three, cash value rose by the same amount paid into a premium.

Consider this:

As of year three, what did that death benefit cost that year?

Was access to money given up or did it act as a deposit into a savings account?

Add a whole life policy and peace of mind to your operating expense, it’s not a luxury item it’s a necessity to do business. It’s a necessity to get away from the banks and take back control and decision making of your own money.

As always, I’m here to help answer your questions that you have from reading Farming Without The Bank. If you have one now, leave it in the comments below and I’ll be sure to contact you with the answer!


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