My previous post was a somewhat fictionalized version of what I’m up against.  Now, as our friends at SailorsSmallFarm pointed out, it’s not all that different than what someone could be up against living in suburbia (though my mortgage was never more than $120k…and I thought that was a huge number!).  But it is a big, sobering number.  Today I’m going to revisit the subject briefly, smoothing some rough edges I left behind.  Hope I don’t make things worse.

I’m not really wanting to compare city mouse and country mouse.  I’m not even wanting to dive into earnings vs. expenditures.  Really, I was wanting an honest assessment of the pure cost of my chosen lifestyle which, from my perspective, is incredibly pricey but far, far lower than I see in much of my peer group.

But, for you city mice, running a business has nothing to do with location.  There are an infinite number of businesses that can be run from a suburban home.  But in any case, you have to make some decisions about your personal financial condition.  15 years ago I spent 90% of my time traveling for work.  As a newlywed.  Yeah.  To pass the evenings I spent a lot of time reading, studying and talking to people: my wife, my father, my father’s father…and my wife’s grandfather (Alan).  Alan was one of several who helped me to change direction in life.  To paraphrase him, “If you want to get ahead in life you have to work a little harder than the next guy.  Your job won’t get it done.  You have to do a little extra work on the side.  Who are arguably the smartest people?  Would you count college professors among them?  They spend a lot of time writing books.  If some of the smartest people need extra work, what does that tell you?”  He then emphasized the need for a business, not another job.  So if you are stuck in town, start mowing grass or bookkeeping or cleaning houses or take on a few remodel jobs.  The point is, you have to do something.   That said, beyond just working, you have to make a few changes.

You have to start questioning every dollar you spend.  Otherwise, that new business income will just float away.  The farm will be lost.  Every action you take is a decision.  In the words of Geddy Lee, “If you choose not to decide you still have made a choice.”  How do you decide where to deploy your money?

We have made (and continue to make) certain sacrifices to support our lifestyle.  I could rattle off a long list of “weird” things we do that really are pretty normal.  Anything from cutting my own hair to canning peaches.  What percentage of the population make (or eat) sauerkraut anymore?  Butcher hogs?  How many women are content to get their ends cut once every 6 months to a year?  In reality, these things aren’t all that weird at all, it’s just that nobody knows how to can anymore.  …or how to cook.  …or how to bake bread without the help of a machine.  …or are comfortable with their natural hair color.  So we are able to save money because we have preserved these skills across generations and picked up from books…and because we’re weird.

And, look.  I know this is little stuff.  I cut my own hair every month saving as much as $120/year.  Not a huge savings.  But I also cut the boys’ hair.  (I know I’m not saying anything new here.)  The little things add up.  The $30 magazine subscription, the extra $x to get cable along with internet, the extra $x to get that premium channel, that cup of coffee to reward yourself…even if you “reward” yourself every day.  I’m not even talking about boats, motorcycles, vacation homes, swimming pools or Disney vacations or tractors, diesel dually pickups or 4-wheelers…none of which you will die without.  I’m talking about daily decisions that affirm and enable a certain lifestyle choice…making positive choices to enable your financial future.

This has nothing to do with being a farmer but it has everything to do with staying a farmer.  Not only do I have to spend less than I earn (which is easy by the way (more on that in a bit)), I have to plan what I’m spending money on.  I’m attempting to run a business.  A few days ago I described a need for a return on capital.  If I don’t get rewarded for my risk, why take the risk?  What’s the point?  I need to see increase (If you need motivation here, go read Matt. 25:14-30).  I only have $X.  I only have Y time.  I need the XY product to be great.  Raising more chickens requires more time but returns more cash compared to cattle.  Chickens also require higher inputs.  I’ll talk more about our experiences with the economics of cattle, pigs and chickens in later posts but none of the dollar values matter if I lack time.  Budgeting time itself is critical and is the subject of the next post in this series.

On Spending Less Than You Earn:

I feel somewhat silly saying this.  Figure out how much you earn.  Figure out how much you are spending.  Cut the spending till it fits, no matter how much it hurts.  As a rule, increasing earnings results in increasing expenses so you just have to do this and do it now! (though increasing your earnings is, generally, a good idea).  It’s so simple, anybody outside of government can do this math.  I understand that simple != easy.  I get it.  This practice gets even better when you can hide a portion of your income from yourself and cut your spending further.  And further.  Pretty soon your credit cards are paid off, your school loans, car loans, mortgage…it’s all behind you.  So.  There you go.  Really, hiding money from yourself and not extending additional credit is all the budget you need.  Can you believe people write whole books on this stuff…mollycoddling or, more likely, patronizing their readers?  Can you believe people buy books on this stuff?  No wonder they are broke.  This is the voice of experience talking.  My name is Chris and I’m a recovering spendaholic.

One Final Thought:

Money is a societal bug-a-boo.  We don’t talk about it.  We don’t like to think about it.  If you are my age it is quite likely that you think of rich people as bad.  That they have obviously done something wrong or immoral to get that money…or their ancestors did.  That having money proves one is immoral.  That poverty is preferred over prosperity.  I don’t think this post is the place to refute such nonsense.  Just understand, if you think money is bad…if you think money is your enemy…if you confuse the verse and think money is the root of all evil instead of the love of money, you will find it always eludes you.  (I really don’t think Paul is condemning rich people (1 Timothy 6), he’s condemning people who desire riches rather than the source of blessing.  See Solomon, Abram, Jehoshaphat, Job….) Money is a tool.  A powerful tool.  A tool you can use to save the world.  But you have to have it to use it.  If you think money is bad, you really need to change your mindset.  Money won’t stay where it is not welcome.

Yesterday I said it helps me to feel better about the workload if I’m getting paid for the work.  Now, I’m not talking about gross farm income, I’m talking net…after expenses and taxes, but I repeat myself.  Let’s see some return on investment here!  If it costs me $12 to make a product that sells for $10, we’re not going to last.  I can sweat through my clothes before 8, pick mountains of berries, eat fresh chicken and pork while restoring the local ecology right up until the day the county shows up asking me why I haven’t paid my taxes.  Then the reality hits home.  Caesar wants his propers.

I have to do more than just work.  I have to generate a surplus.

This is important so I’m going to dwell on it further.  I want to pause to clarify that this is not a “Wait!  Don’t do it!” post.  I’m all in favor of you chasing down your dreams as I chase mine.  We need more producers and that’s “we” as in the community of innovative, alternative farmers, “we” as in consumers of quality food, “we” as in a national economic body and “we” as in inhabitants of a rock that needs a little TLC.  Maybe a few more “we’s” as well.  Now is the time to start.  There is so much to learn…so much to do…you better get started…but take a moment to consider what you are going to do and how you’re going to pay for it.

The Problem

I have to get paid for my work.  Work may be its own reward but profitable work brings home the bacon.  The Labor theory of value (put simply) states that “The value of a commodity increases in proportion to the duration and intensity of labor performed on average for its production.”  Adam Smith wrote that the exchange value of a good was “equal to the quantity of labour which it enables him to purchase or command.”  Much later Marx defined “Labor” as “the actual activity of producing value.”  So, according to this theory, I can make black caps or red caps with the same labor so they should be valued the same.  Unfortunately this is entirely wrong.  Black hats are, like, soooo 2012.  Red hats are in fashion now.  Neither are useful to people living in the frozen north who want ear flaps.  Value comes not from the laborer but from the consumer.  I can put an enormous amount of labor into creating something but for any of several reasons consumers may reject it as value is subjective and customers are fickle.  Betamax was arguably a better technology than VHS but we all ended up with VHS players…until we got DVDs and later Blue-Ray and later streaming technology.  Just as there is always more work to do there is, apparently, always more stuff to consume…we never get enough.  People will buy anything, pay any price no matter the labor that went into the production of the good.

Back to the point, it may cost me $12 per pound to produce a chicken but I’m probably not going to sell many $48 chickens as long as there are alternatives available for less.  You must produce efficiently or you will price yourself out of the market.  Further, just because you are working and money is flowing in doesn’t mean you are getting ahead.  You can’t simply be busy.  We often see people at craft fairs losing money on every transaction but filling the boring days of their retirement.  This practice won’t buy a farm (or power a nation).  You have to create more value than you consume and the value of your creation is defined by consumers.  You have to provide a good or service that people want…and $48 chicken is a hard sell but, apparently, an $85,000 Tesla S is a bargain.  Well, it must be.  They sell a lot of them.

The Problem With the Problem

We are, as defined in Mises’ Human Action, actors.  We weigh options and take action.  If the option before us will not benefit us we do not act.  As a consequence we always act in our own best interest…unless we don’t.  I like the taste of Coke products.  Mmmm.  But it is to my long-term detriment to consume Coke products.  I have to believe a heroin addict is following his own perceived best interest by using.  Similarly, owning a farm may be the fulfillment of a dream…until the dream turns into a nightmare.  In Knowledge Rich Ranching Allan Nation points out that there is a 99% turnover rate of “Urban Pioneers” in Montana in only 9 years.  That means people took what appeared to be positive action but either it proved to be a mistake or they followed the wrong path.  9 years into it, they gave up on the dream.  From my own experience, they then spend the next 50 years telling other potential “urban pioneers” not to go because they tried it and it doesn’t work and there’s no money in it.  You rarely hear an honest, “Well, I think it could be done but we went in starry-eyed and naive.  If we had only tracked our expenses and planned for a multi-year learning curve.  We had so much to learn and do but didn’t give ourselves enough time.  We needed a mentor.”

Look, I have made a little money in my time.  Not much but some.  I have rarely made money on accident.  You have to plan.  You have to find an edge.  You have to get up early after a snowstorm at age 10 to make a few bucks shoveling driveways.  You have to call your buddies the night before and work out who will go to which house, going to bed praying it will actually snow during the night.  You can’t show up too early or an angry woman in a robe and curlers will invite you to leave.  You have to show up early enough to beat the tractors that will plow the driveways for free.  It’s all about market timing and timing takes planning.  You have to plan…even if you’re 10.

You have to plan!  Who is going to buy those eggs?  How will you sell that pork?  How much will it cost to produce?  How much time are you spending on this?  Are you producing for the commodity market or will you retail every stinking one?  What’s the plan here?  What’s the backup plan?  How are you going to pay for this farm?  How long will it take to build fertility?  How many years will it take you to learn how to repair the soil?  How are you going to keep it going when you break your leg?  How are you going to support your family if something happens to you?  Want to retire someday?  Take a vacation?  What’s the plan?

The Summary of the Problems

So the problem is this: I have to make something that people want…and have to do efficiently enough that I have something left over.  The problem with the problem is that there aren’t always immediate consequences for mistakes.  Your 5-acre horse farm may not wipe out your bank account immediately.  Those 5,000 broilers may only lose you $1 each this year but, over time, if you aren’t providing value to consumers – and doing so efficiently – you’re heading for disaster.  If you’re going to keep this farm thing you have to at least break even.  If you’re not getting paid to work….why are you working?  It is worse than a waste of time and materials to make insulated wool hats with ear flaps to sell at a July market in Oklahoma.  Though Smith and Marx disagree, we would all be better off if you had done nothing.

So what’s the solution?

Beyond planting trees, moving cows and building fence, somebody has to pay for this lovely country estate.  If we can’t pay for it, some mean person will show up, demand the keys and explain that we have to leave.  Then someone else will get a chance to farm this ground.  Even if the land was ours free and clear we would still have to work and would still feel better about that work if the fruit of our labor found a ready market.  It is deeply satisfying to produce something that people enjoy…to add value to something that makes someone else’s life better…to be a part of a voluntary transaction where both parties come out ahead.  I get a little money in exchange for a little bird.  The money keeps my farm running.   The bird keeps your family healthy (for several meals).  The transaction strengthens both the local ecology and the local economy.  That feeling of satisfaction helps get me started early in the morning on butchering day.

What does it take to keep a 60 acre farm running?  Stay tuned.  I’m going to share a realistic but somewhat fictional budget of a farm just like mine.  I also have a separate post coming where I want to explore why we have a moral imperative to produce more than we consume.

In its original form, this was a post justifying feeling sorry for myself because that’s where I was a month ago.  Fortunately I didn’t publish that nonsense.

So.  Put your hands in the air if you have ever had a bad day.  …or five.  …or if you have ever become emotional after several hard days and long, sleepless nights.  Any hands up?

Let me give you the skinny.  Working hard is hard work.  When it’s hot outside, you’re going to sweat.  Sometimes a lot.  If you are allergic to hay, putting up hay will make you sneeze.  Cows will get out.  At night.  In the road.  Rain won’t come when you need it but will always come as soon as you mow hay.  Rain will find its way into your home.  Ducks are hard to pluck.  Children need fathers who can set work aside and just hang out…just when the pressure to work is the highest.  Husbands need wives who understand that sometimes (and only sometimes) I just want to sit and play video games…accomplishing nothing, learning nothing, improving nothing…just shooting aliens with my brain in the off position…OK Boo?

Sometimes things are so difficult that I regret moving here…but who hasn’t wondered if they made the right choices in life?  If they married the right spouse?  …if they went to the right school?  …if things could have turned out better if they had only done that one thing differently?

Today I live on a farm.  This is where I am.  In some ways it’s who I am.  I could write about the bad stuff that comes with working a farm.  I could tell you what it is and what it is not from a strongly negative perspective.  I could do it in the name of “saving future homesteaders from the heartbreak of shattered dreams.”  But that is all meaningless.  A month after I wrote the first draft of this post I feel radically different about the farm.  It’s still hot out, the days are still long, there is still more work than I can handle but I feel pretty OK about it.  What is different?

You know that thing you love?  You would do it even if it didn’t pay.  You would want to share it with everyone you know and love…even strangers on the street.  It’s amazingly cool and you feel blessed to be able to do it…to be able to share it.  You know that thing?  Sometimes it really stinks.

But only sometimes.

Here’s a tip to make the work more tolerable:  Get paid to do it.  More on this tomorrow-ish.