Budgeting, Planning, Dreaming and Praying for a Miracle

This is a continuation of a series about deliberately succeeding…or trying to anyway.  Thanks for sticking with me this far.  I apologize but I’m not going to share my family’s annual income either from on or off farm.  I think this post gives an idea of what our current farm income is…by that I mean it’s low.  We’re learning and education is not free.  I’m working off the farm 12 hours each day so that limits our options and our farm income somewhat.  I do have some ideas to share for moving to full-time on the farm but that will be handled separately.  Please don’t be discouraged by this post.  These are just numbers.  These specific numbers may not apply to you but you should figure out what numbers do apply.  Ready to fix my math?

Let’s do some quick math on a napkin with a mix of fictional and real numbers. I bought a farm. For simplicity’s sake let’s say I paid $4,000 for each of 60 acres of mixed Illinois ground (I know, right?). I would owe some bank $240,000. That’s not a small number. Now, let’s say I borrowed this at 4% fixed over 30 years (I wish!). These numbers are bogus but let’s run with it anyway. I have to find a way to generate $1,145 every month or the bank invites me to leave. We’ll round that up to $14,000 per year.  (People regularly pay this for houses in the suburbs on 1/4 acre lots!)

It’s not enough to pay the bank. I have to pay the king for the right to stay on my own land. Let’s tack another $3,000 on to that annual expense.  Hail Caesar…er…Macoupin County!

Now, the bank (and rational self-interest) requires that I insure my land. I need to be covered in case of flood, tornado, fire, theft, unemployment or death. In short, I have to make a bet that something bad is going to happen so my wife won’t be homeless in case something unlikely happens. Let’s tack on another $3,000 annually though that number is probably high.  (My wife will never be homeless.  She’s so pretty it will just be a chance for her to upgrade to a better husband.)

Wedding2

I realize that ownership may not be for everybody. It might be better to rearrange those numbers a bit and rent or lease. Those options have significant advantages but are not free either. Stay with me as we move forward. To this point, just to own my farm I have to come up with $20,000 each year for the next 30 years. Let’s peel the onion a bit with additional rough numbers.

We get 4 seasons here. We usually have 4 months that don’t require any heating or cooling, 4 months that require heating and cooling and 4 months that require either heating or cooling. With me? My propane company just sent out a mailer to all subscribers asking that we get our bills up to date before the next heating season starts. It’s July. I’m not bothered by a company wanting to get paid for delivering a product. I’m troubled that late payment is so normal that it was handled in a mass mailer rather than just a quick letter to a few individuals.  I keep our drafty old home at 58 in the winter and heat one room with wood so our propane usage is kept to one tank per year. Even still, that propane isn’t free. Let’s put down another $600 to stay warm and have hot water, leaving out the little bit it takes to make my chainsaw run.

WoodStove

Being a family of computer-users and avid readers, we enjoy having power on. Further, a little air-conditioning on a hot day is a good thing. I’ll go big and tack on an additional $150 per month ($1800). We use city water at $100/month. We call in our trash pickup once/month paying $1.25 per bag ($63/year). We don’t but we could easily buy $500 worth of groceries each month (including Kleenex and TP). Our ONE CAR needs a bit of repair each year and we continue to make a $300 payment to ourselves so we can replace it in the future ($4,000) and don’t forget fuel ($4000 which would go down if I didn’t commute to work each day) and car insurance ($600). Oh, and the wife needs a cell phone for $240 and home internet costs $600/yr and since we have internet we should get Netflix for a mere $100/year.

So we’re at $39,203 just to live – and live comfortably – for a year. Missed several things like house repair($800), medical expenses ($1000), hobbies ($300), overdue book fines ($50), clothing for 6 ($900), Homeschooling supplies ($600), Tithe (10% of earnings) but we’ve got a starting number.  Rounding to $51,000 should cover to this point, $44,000 if you aren’t one to tithe…basing tithe on expected required income.

To this point, to live on my 60 acres I have to produce $51,000 each year after taxes…otherwise I’ll either eat into my savings or have to get a job off-farm. I have chosen the off-farm option.

But we have only just started.  All I am doing is paying for land and going through the motions.  It’s not exactly a Spartan existence (Netflix) but it’s also not posh.  The dentist smacked me with my own mortality this week.  One of these days I’m going to get old…possibly ill.  That’s going to require some cash.  Let’s put aside $10,000 each year and hope it earns 10%.  Now we’re at $61,000.

There is that dream of knocking down the current house ($10,000) and building a new one ($100/sq ft).  Sometimes, when farming, a truck is helpful.  Or a tractor with a loader.  But if we’re not careful I’ll have a new house, a 4-wheeler, a pickup truck a tractor and loader and no business.  Let’s add $5000 to develop our farm business.  We aren’t advertising.  We’re not building an online order system.  We’re just buying animals, housing, fencing and feed plus any licensing we need.  So now we’re shooting for $66,000.  Oh, heck with the house, tractor and truck.

Oh, and the tax man cometh.  To get to $66,000 after taxes we need somewhere in the neighborhood of $72,000.  The tax man is going to penalize me under the Affordable Healthcare Act if I don’t buy some health insurance too.  You will know better than me what that will cost you but for the sake of offering a number, insurance through Samaritan Ministries would cost my family $370/month bringing our total to $76,400 before taxes.  Another reason to keep that off-farm job.  Ugh.

If I make $1 for every dozen eggs I sell (I don’t but let’s play here), I have to sell 76,400 dozen eggs.  That’s 209 dozen each day…that’s a highly optomistic, hard-working 3,000 birds, the magical limit imposed on farms of my license type by the state of Illinois.  BTW, 3,000 birds would need 600 next boxes.  60 10-hole boxes would set you back $10,000, not to mention the $4,000 you paid for chicks, $2,700 for 16 lengths of PermaNet, and, assuming each chicken needs 25# of feed up to point of lay and if you can find feed around $13 per bag, you’ll need $20,000 worth of feed to get started.  Then you have to ship 7 cases of eggs every day!  So.  Let’s not start with 3,000 birds.

LayerHouse

Still thinking about farming full-time…abandoning the prison job?  I think it is possible.  Keep in mind, though, that I work off farm.  …that Joel Salatin‘s dad worked off farm.  …that Herrick Kimball built his business while working off-farm.  …that Greg Judy had a job off farm.  …that Gene Logsdon kept writing and working off farm.  …that J. Hector St. John de Crèvecoeur wrote about working off-farm.  That working off-farm and living frugally to pay this mutha off is a normal thing.  We recently heard Salatin speak about transitioning to full-time and I’ll explore some of those ideas in an upcoming post, also sharing our trajectory and how we’re working to avoid the ridiculous $37,000 first egg scenario above.

Luke 14:28 says:

Suppose one of you wants to build a tower. Won’t you first sit down and estimate the cost to see if you have enough money to complete it?

Pencil these numbers out for yourself.  Add in Scouts, sports and music lessons.  Planning for the kids’ college?  Don’t feel discouraged.  Eat less food.  Make that car last an extra year.  Cancel Netflix.  Don’t get sick, old and don’t ever retire.  Floss!  Seriously, I don’t mean for this to be a “glass is half-empty” post.  I just think it is important to define the target before we begin aiming for it.  Next time we’ll start aiming.

UPDATE:

Dad pointed out I have to come up with the same money weather I own a $240,000 house in the suburbs or a $240,000 farm in the stix.  Both of these have their advantages but those advantages have to be realized.

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Thrifty Homesteads and Family Fortunes

Sorry for the lack of posts lately.  The weather is great outside right now and my to-do list just seems to grow.  We’re not even finding/making time to read right now.  My pile of unfinished/reread/just for fun books grows…

It’s all compost and gardens with a smattering of turkey processing.

We are still reading Bill Bonner’s Family Fortunes.  We found a passage that seems familiar to us.

When we were driving through western Pennsylvania recently, we were struck by how cheap it would be to live there.  Houses are very inexpensive, at least compared to what we’re used to in the Baltimore-Washington metro area.  You could have your own garden.  A few goats, chickens and rabbits.  An old car.  A wood stove.  A library card and an Amazon account.

What more do you need?  Once you were set up, it’s hard to see what you could spend money on.  There are no shops worth frequenting, no restaurants worth dining at, no nightclubs, no theatres – not much of anything.

Would this be a barren and boring life?  Not at all!  Gardening, building, reading, visiting with friends, watching movies on the home computer.  What more could you want?  And with such low fixed costs, you could easily splurge from time to time with a weekend in Manhattan or Miami.

What would be a reasonable budget for a life like that?  Maybe $1,000 per month.

OK.  Well, I guess we’re living the dream…though I’m quite a bit west of western Pennsylvania.  I have a few thoughts on the passage above.  He’s not really writing about a dream life of gardening and chickens.  He’s writing about the need to minimize expenses in case your family fortune isn’t measured in millions.  In his example, he suggests a “fortune” of $300,000 at 4% interest to keep you in that $1,000 per month category.  With that, he thinks you could live quite well on your little farm in Timbuktu.  I think you can do better but let’s explore his example.

Garden:  With season extension your garden can provide a huge portion of your family groceries.  Check out The Winter Harvest Handbook, How to Grow More Vegetables.  Get yourself a small greenhouse and you should be in pretty good shape.  Just go out and get your hands dirty.

Goats: Ugh.  Sorry Caitlyn.  Goats are great because they are small enough to manage and they are generally fun to be around (does anyway).  BUT they jump fences, crawl under fences and turn themselves into a fog and pass right through fences.  They’ll destroy your fruit trees if given the chance.  They’ll help themselves to your lovely broccoli plants.  In short, they’ll compete with you for things you want to eat.  Even if you manage to keep them fenced (we keep ours fenced…now) it’s hard to keep things they like in front of them.  Goats like browse.  They want to eat tree leaves and woody, growing tips of branches.  There are a few weeds they like to eat.  This is a good thing early on if you live on neglected ground.  But after a season or two, the voracious appetites of your goat friends will have the weeds and brush under control.  Then what?  Well, they don’t eat grass.  So I guess you’re going to have to feed them alfalfa hay.  Remember Bill’s goal of living under $1,000/month?  It just went out the window.  

I’m going to suggest you buy raw milk from a neighbor or, if you have the room, get yourself a miniature dairy cow, specifically searching for a low-maintenance animal that does well without grain.  The goal is efficient conversion of sunlight into product and cows are just better at it than goats if your soil is in any kind of condition at all.  Milk is a great source of health and wealth on the farm as you can feed yourself, your pigs or even your chicks with milk.  Even the soil benefits from a feeding of milk.  But goats, as great as they are, may not be the best means to that end.

Chickens and Rabbits:
I absolutely agree.  But, if you’re looking to minimize expenses, just keep a few hens for eggs.  Better yet, keep a few ducks as they will eat more grass and weeds than hens.  Rely on the rabbits to provide the meat.  Kept for those purposes, you can mostly feed both out of your garden…and you can mostly feed your garden out of the chickens and rabbits.  Meat birds require a lot of time and energy.  Meat rabbits just don’t.  Four heritage layers will keep your family in eggs for two years.  Then you get a few replacement birds and make soup with the old ones.

Old Car?  Check.

Wood Stove?  Check…but not installed yet.  It would be better to go with a rocket mass heater so you wouldn’t have to own a chainsaw, just a good pair of loppers.

Library Card?  Check.

Amazon Account?  Check.  But it requires restraint.  It’s easy to fill your bookshelves or your Kindle with books you’ll never get around to reading.  Budgets have to include time.  Time.  Where does it all go?

$300,000?  Nope.  Not even close.  We have tens of dollars.  Dozens even.  But we’re moving in the right direction.

Other than that I’d say he’s not far off.  If we didn’t have a house payment and didn’t drive to town for work every day our monthly outflow would be something on the order of $1,000.  The difficulty comes when we need to make capital investments in our property to increase fertility, productivity or water retention…but I’m looking at it as a business and he’s just looking for a place to live.

I would also suggest a pig or two for your thrifty homestead to consume garden waste, orchard waste, kitchen waste and sour milk.  Mmmmm…bacon.

Well, those are my thoughts on it.  Let me know your thoughts in comments.