I'm $500,000 In Debt After Taking Other People's Advice!

foreign Nathan starts this hour off in South Dakota hi Nathan welcome to the Ramsey Show hi Dave and Rachel thank you for taking that call sure what's up yeah so I'm a 22 year old farmer and I recently in an attempt to grow my operation bought a piece of land um so between the land loan and an operating loan I have about five hundred thousand dollars in debt so the land loan is 475 000 and it was just a couple months ago that I bought that and it's just starting to set in now um I'm going to be paying this off for the next 30 Years and I guess I just wanted to get your input on what the best way to tackle that would be that scares me to death does it not scare you it's yes it is um I mean my chest is tight and I don't owe the money yeah wow man you're not freaked out at all well I am I mean Farmland is terribly expensive and it's always I mean I've always been taught by my dad and other Farmers that you just have to start somewhere and you know start paying some land down and so your dad's suggestion is it 22 years old that you go 500 000 in debt he endorsed this plan yes he did wow okay I'm not sure I'm not sure that we have any answers for you to be honest with you Nathan um well are you going to be is I guess your plan is to farm the lands and make an income off of that correct yes correct okay what do you anticipate the income being yeah well it varies a lot the farm economy has gotten worse the past few months and right now it's looking like the profit from the land won't quite make the payment so about 25 000 is like what I think the cross will be off this year the payment each year is 40 Grand but on the better years it could make its own payment possibly yeah so you bought a business for five hundred thousand dollars at 22 years old that loses money this year and on a good year breaks even well I have other land that I'm renting from I know did you not hear what I just said yes that's just dumb okay that doesn't make any sense at all that you know if it you know but because you're a farmer you think it's okay it's not okay that's not that's not good math that's not good business Farm farming is a business it should be a profitable business and the way you engage in it must be profitable you have to create a profit and loss statement and you have to actually create Revenue in excess of your expenses and you put so much debt service on yourself you can't breathe so Nathan the extreme you know uh decision here would be could you sell it is there is there a possibility are there buyers is this why would you want to work for 30 years for zero money all you do is clear a piece of ground 22 and he's a second gen farmer I'm just saying the logic of this is that by your dad suggesting this is baffling that you're going to work for zero profit for the next 30 Years and your net result is you clear a piece of ground yeah yeah it's not logical I mean I love real estate I love farming I love Farmers uh but but this doesn't it's not it doesn't make sense so something you you guys have to back up from this a little bit and figure out a different approach to create a profitable business or you need to get out of this before you get foreclosed on all right because what's going to happen is if you borrow thirty thousand dollars to cover your losses this year now you're 23 and you owe more on the ground than it's worth yes that's right and then the next year we hope to break even yeah no man I'm sorry I don't want to be mean to you at all I have a tremendous respect for how hard you work I have tremendous respect for the fact that a small percentage of Americans feed all of the rest of us yes and uh but that does not mean that because but this is not sustainable we're not going to justify it for you Nathan I mean like you want to be able to sleep at night I want you to set yourself up I want you if you told me you're a brain surgeon and you were breaking even I would tell you not to be a brain surgeon you know if you told me you were in brain surgery believe me if I'm going to get operated on I'd like a good brain surgeon around if I want some food on my table I'd like a good farmer like you out there working man I appreciate Who You Are and so I'm All About You winning at this I want you to be profitable if you told me you could make a million dollars a year being a farmer I'd be proud for you I'd want you to do that okay you know I mean so this is not me hating on uh but this idea that just but I got to tell you man I've worked with Farmers for a long time 30 years and a lot of them carry on and gripe about me because I tell them not to borrow five hundred thousand dollars on a combine and and then but there's this Romanticism with farming that says oh the math doesn't apply because I'm a farmer well math does apply it applies in every dad-com business and it's the same philosophy we use for any other business it applies if you're running a non-profit Church serving Jesus and it applies if you live in California you want to buy a house right like oh it is just the math it's the math and it's what brings a blessing to your life and that's our goal here and I wish I had a magic wand mine's low on batteries that could make this deal work I don't know how this deal Works unless you could tell me you can make a hundred thousand dollars of your profit instead of losing money the first year and maybe the second year and maybe the third year and ending up owing a hundred thousand dollars more within a couple of years on this property than it's worth and uh that's not a plan so what would you say sell it that'll rework the business model I mean if they're I I don't know how he what he's doing I don't know what his crop rotation is I don't know what his particular crop choice is I I don't know you know what he's looking at why why you're going into a business that at 22 that you're planting that you're planning to lose money well it could be the CR I mean it could be the weather I mean the farm economy and the farm economy depending on which segment we're talking about is struggling yeah I don't argue that point either but you can't just you know you can't open a restaurant and lose money yeah the first year in the second year and oh so much that you can't pay your payments that's why that doesn't it doesn't work in any business and man I wish I could make this better for you I but you've got to either rework your business approach to this or you need to look at getting this sold before you get yourself bankrupted by your dad's horrible advice this is the Ramsay show

Channel: The Ramsey Show Highlights

Views: 144,487

Keywords: the dave ramsey show, budget money debt cash, real estate, insurance, how to make money, dave ramsey, save, credit card, compound interest, buying house, buy, snowball, I'm $500, 000 In Debt After Taking Other People's Advice!

Id: RIkP3oR1Dlo

Length: 7min 51sec (471 seconds)

Published: Thu May 25 2023