Overdraft requirements for coming growing season.

farmerm · Jan 28, 2020

teslacoils said:
I think the number of families who have under £500 of cash or savings at any one time might shock you.

The 2018 figure I heard was 1/4 *families* have under £100.

We have created a nation of people of live only for the moment, people who have no concept of saving and if they want something they have to have it now. Rather than run an older car, have an older couch, have an older TV, have an older phone and save towards the replacements they buy them now on credit. Its all affordable if its within their weekly income, at least it is until they have an unexpected bill or some other small hiccup to their finances and then they get stuck in an ever growing debt cycle. People expect to live a footballers lifestyle with everything new and meals out every week whist only earning the wage of a footballers boot cleaner! I was brought up to believe you should only ever borrow to invest eg a mortgage, if you are borrowing to buy eg a car, then you are living beyond your means. But if this consumerism, spend, spend, spend, mentality was now turned off, the UK economy would collapse

Renaultman · Jan 28, 2020

lazy farmer said:
Nah this yrs fine it’s the yr after?!

Same here. Next year is very worrying.

Renaultman · Jan 28, 2020

onthehoof said:
A lot of wheels will fall off at 3%, if it got to 5% there would be a monumental car crash.
It’s strange but I can’t ever see interest rates going back over 2% in my lifetime

Trouble is headline rates may be small but we're nearly all tied to Libor (which is currently 1.92%) for borrowing but not for investment.

Reducing overdraft without incurring big tax bills is the big challenge for me.

farmerm · Jan 28, 2020

stroller said:
Can you put in a: not minted just a tight fisted git so don't need an overdraft.

Yes that's a more fair reflection of how a proportion of farms operate. Ultimately cash is king!

Anyone using a business overdraft extensively really needs to look at why they are doing so and if there is a better way, its could be cheaper to borrow £10,000 for a year than £10,000 on your overdraft for money than a month or 2! For modest amounts of a few grand you can borrow for a month on 1 personal credit card, you pay it off in full with a second one and then pay that off in full from sales before then end of month 2 and it will cost you no interest at all... Look at purchase timings, you might be better off paying a few quid more for your fertiliser in the spring having sold grain to pay for it first. I know one thing, I am not on this planet to work for the blood thirsty banks, they can work for me

farmerm · Jan 28, 2020

Renaultman said:
Trouble is headline rates may be small but we're nearly all tied to Libor (which is currently 1.92%) for borrowing but not for investment.
Reducing overdraft without incurring big tax bills is the big challenge for me.

How is that? I would rather earn a profit and pay tax than splurge cash on a depreciating assets and give the remainder to the banks.

neilo · Jan 28, 2020

farmerm said:
We have created a nation of people of live only for the moment, people who have no concept of saving and if they want something they have to have it now. Rather than run an older car, have an older couch, have an older TV, have an older phone and save towards the replacements they buy them now on credit. Its all affordable if its within their weekly income, at least it is until they have an unexpected bill or some other small hiccup to their finances and then they get stuck in an ever growing debt cycle. People expect to live a footballers lifestyle with everything new and meals out every week whist only earning the wage of a footballers boot cleaner! I was brought up to believe you should only ever borrow to invest eg a mortgage, if you are borrowing to buy eg a car, then you are living beyond your means. But if this consumerism, spend, spend, spend, mentality was now turned off, the UK economy would collapse

If you don’t own anything, I guess the fear of losing it all from being declared bankrupt is gone? Fairly easy to just walk away from your debts and start again these days.

I got a new 50” tele at Christmas. It’s a 10 year old Plasma tele and it cost £75. The previous owner was upgrading to a 60” apparently, as the picture was so much clearer, and it wasn’t much a month.....

If they’d bothered to spend 20 minutes cleaning the half inch of grime and children’s greasy fingerprints off the screen, they’d have found this one had a cracking picture too. Looks bloody daft in our house though, or so I’m told.?

bobajob · Jan 28, 2020

An overdraft on a farm shouldn't altogether be seen as something that's terrible.
Borrowings at some point in the year and paying it off is quite common I would think. Its a seasonal business after all, crops sown in one season and harvested in another (be it livestock or arable etc)

Another thing, we could probably all see a farm in the area that most likely have no borrowings/ scared to borrow money but it looks to be stagnating where no investment is made in equipment or buildings due to the dreaded borrowing (generalising a lot here).
Some borrowing and investment in the business would pay them back/ make life easier etc etc.
No overdraft here just now, but there can be at some times of the year.

Renaultman · Jan 28, 2020

farmerm said:
How is that? I would rather earn a profit and pay tax than splurge cash on a depreciating assets and give the remainder to the banks.

I have a lot of aging machinery that I am upgrading while the opportunity is there, I could still change a tractor, my drier and the combine but going to reduce overdraft a bit this year in the hopes that they don't let me down.

David. · Jan 28, 2020

neilo said:
If you don’t own anything, I guess the fear of losing it all from being declared bankrupt is gone? Fairly easy to just walk away from your debts and start again these days.

I got a new 50” tele at Christmas. It’s a 10 year old Plasma tele and it s owner was upgrading to a 60” apparently, as the picture was so much clearer, and it wasn’t much a month.....

If they’d bothered to spend 20 minutes cleaning the half inch of grime and children’s greasy fingerprints off the screen, they’d have found this one had a cracking picture too. Looks bloody daft in our house though, or so I’m told.?

That's a bit flash, do you leave the curtains open so all the neighbours can see it?

neilo · Jan 28, 2020

David. said:
That's a bit flash, do you leave the curtains open so all the neighbours can see it?

My eyesight is starting to fail with old age, and I need to see what Adam’s up to every Sunday, or I wouldn’t know which way to turn.?

The picture must be very different, one of the cats has launched at it twice already.?

jendan · Jan 28, 2020

Phil P said:
We’re actually just looking at moving at the moment, if you’ve no borrowing then it’s pretty straight forward (so they’re saying). We have some money borrowed as we bought land last year, the deal We’ve been offered to move just can’t be ignored but will incur costs. We’ve been with the same bank since my great grandfather so it’s not something we’re taking likely and you’d think they’d want to keep our business? It’s not the impression I’m been given though and I’ll be honest I’m not just happy with a few other things the bank has done!

Care to tell us which one you are moving from,and to who? First letter of the alphabet will do.

teslacoils · Jan 28, 2020

My mission for 2020 is to get the bank margin on my mortgage reduced. It's not huge, but it could certainly be lower.

Phil P · Jan 28, 2020

jendan said:
Care to tell us which one you are moving from,and to who? First letter of the alphabet will do.

Natwest to Yorkshire Bank (possibly), Yorkshire Bank are the only Bank that are currently trying to increase and activity support the farming sector.
They now have a farmer (not a banker) as the head of they agricultural department, it helps to have someone who knows about the sector in charge. He’s also seems a descent chap, had a meal and a few beers with him earlier this month.

ridger · Jan 28, 2020

farmerm said:
We have created a nation of people of live only for the moment, people who have no concept of saving and if they want something they have to have it now. Rather than run an older car, have an older couch, have an older TV, have an older phone and save towards the replacements they buy them now on credit. Its all affordable if its within their weekly income, at least it is until they have an unexpected bill or some other small hiccup to their finances and then they get stuck in an ever growing debt cycle. People expect to live a footballers lifestyle with everything new and meals out every week whist only earning the wage of a footballers boot cleaner! I was brought up to believe you should only ever borrow to invest eg a mortgage, if you are borrowing to buy eg a car, then you are living beyond your means. But if this consumerism, spend, spend, spend, mentality was now turned off, the UK economy would collapse

I'd never dream of borrowing for a car, I buy the best that I can afford at the particular time then buy cattle

Still Farming · Jan 28, 2020

Martin Lewis show last night was on about loans and rates and explained often cheaper to borrow more to get better interest rate and pay less ?
Don't seem right but often is?

anzani · Jan 28, 2020

Phil P said:
Natwest to Yorkshire Bank (possibly), Yorkshire Bank are the only Bank that are currently trying to increase and activity support the farming sector.
They now have a farmer (not a banker) as the head of they agricultural department, it helps to have someone who knows about the sector in charge. He’s also seems a descent chap, had a meal and a few beers with him earlier this month.

So who (really) paid??

midlandslad · Jan 28, 2020

teslacoils said:
My mission for 2020 is to get the bank margin on my mortgage reduced. It's not huge, but it could certainly be lower.

What level are you hoping to get it to?

Flat 10 · Jan 28, 2020

Still Farming said:
Martin Lewis show last night was on about loans and rates and explained often cheaper to borrow more to get better interest rate and pay less ?
Don't seem right but often is?

I was always told its tough to get them to lend you the first million but if you have that ok, they'll all be falling over themselves to lend you the next 10...............

Still Farming · Jan 28, 2020

Flat 10 said:
I was always told its tough to get them to lend you the first million but if you have that ok, they'll all be falling over themselves to lend you the next 10...............

Lot of noughts less I was talking of mind?

glasshouse · Jan 28, 2020

Overdrafts usually arise from catastrophic harvests
If you are farming a fair area, its quite possible to lose £100/ acre if prices yields and weather all go against you, like in 1997.
To the younger viewers, that was when wheat dropped from £120 to £60 in six months
Many tenant farmers had been railroaded into big rent increases in 96, fert and seed were bought dear.

Overdraft requirements for coming growing season.

Overdraft requirements will be

Higher

Same

Lower

Minted do not need an overdraft

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0 %

Up to 25%

25-50%

50-75%

75-100%

100% I’ve had enough of farming!

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