What’s been going on!
I indicated a few weeks ago when I was explaining some of the reasons why we were retiring now, that I would talk some about how it is we can actually retire as most farmers can’t unless they sell the farm, which we are not doing. A large percentage of Americans have no savings much less retirement savings. Farmers are the same or worse but they do at least have some, or a lot of, assets in their farmland and equipment. They are sure as hell are not part of any pension system to rely on, short of some Social Security, if they paid into it.
Our parents were very fortunate to have had excellent pensions and health care insurance from working for large institutions but we knew that we would have to take care of ourselves and started early to make sure we could survive any disasters or economic shakeups that would come our way. If you are under 40 or 50 you probably have already figured this out but- pensions/company retirement plans are a thing of the past! Even if you currently work for a company that has one I would be very leery of it still being around when you need it. I am looking at all of you younger folks, especially my farmer friends and self-employed folks, start saving now and as much as you can.
The other fiscal thing we got from our parents was “a Great Depression mentality”, those of you old enough know what this means. You are frugal because you don’t know when things might get better and it imbues everything you do even when things do get better. We knew that we would never make much cash money and moving into a tent, buying land and building a farming business from scratch when interest rates were near 20 percent just reinforced the vow of poverty we had taken. We have never approached the median household income and I am sure that for many years we were technically below the poverty level but farm net incomes and public work net incomes are apples and oranges and too long a discussion for this newsletter.
Despite being cash flow challenged we started to save enough to have six months operating money in the bank and we had everything reasonably insured in case of a disaster, including us with health insurance as farming is the fifth or sixth most dangerous profession and it is the number one reason farms go out of business.
We were scarred by the high interest rates of the early 80’s so worked very hard to not carry any debt except for very large items like land, vehicles and greenhouses and paid them off on time and as fast as we could. We paid the credit card balance on time every month and deposited the payroll and other business taxes on time too, it is probably one of the other main reasons people go out of business, they don’t deposit their tax withholdings. We paid for almost all of the infrastructure development with cash, as it came in. We lived within our means. Everything is paid off, we have no debt.
We were very frugal, essentially didn’t take a vacation or trip that wasn’t farm related for the first 15 years and started to save what we could for the long run in our mid-thirties, a late start for sure. We have been very lucky and can point to four important reasons we were able to save much at all.
1. We have been incredibly healthy with no major accidents or injuries and essentially have never missed a day of work, including our staff.
2. We did not have kids, just sayin’
3. We built and did all of the maintenance of the farm ourselves, every nail and plumbing pipe, saving tens of thousands of dollars by not hiring people to do the work. We now have mechanics work on our vehicles and other equipment but we used to do all of that too.
4. We had very little student debt, a much bigger issue these days for younger people.
We have invested those savings in the stock market in mutual funds and exchange traded funds, very diversified. I still think the stock markets are rigged for the big guys but if you keep it simple it works for us too. We have used a fiduciary financial advisor particularly to help with our farm transition planning around Jennie. She constantly remarks on how little money we live on.
So that is it, it is not rocket science just discipline and playing the long game, not trying to swing for the fences with get rich quick schemes. Sorry, wish it was more sexy. There is now an excellent small, short, uncomplicated book that I recommend to everyone, especially younger folks, The Index Card. Written by a professor and financial writer who once commented that everything you needed to know about personal finance can be written on one index card and its true, the book just expands it a bit.
Picture of the week
That lush green exuberance of spring
What’s going to be at Market?