Paying off debt

[Patrick NC]

I saved every bit of profit I've made with my mill over the past year and today I paid off all my mill related debt. I paid off $18,473 in personal loans and credit card debt.  I've got about $4000 left for some upgrades to the mill. Big milestone for me. Now it's time for me to start saving for a new mill in a couple of years. I've been eyeing a Baker Blue streak on their website lately. 

[Bill]

Surely does feel good to make those last couple payments

[dgdrls]

    Congratulations

D

[trimguy]

Congratulations, that's a big deal !

[Dan_Shade]

Awesome 

[taylorsmissbeehaven]

I know that feels good! Thats how I upgraded to the LT 35. Keep your eye on the prize like the dangling carrot approach and things happen fast. Thats a great milestone and you should be proud!!  Brian

[moodnacreek]

W ay to go, do it now while the economy is still good and be thankful and satisfied with your achievements.  And get a circle mill next time. 

[Resonator]

"Debt is dumb, cash is king, and the paid off home mortgage has taken the place of the BMW as the status symbol of choice." ;D

[petefrom bearswamp]

Good on ya guy.
Being debt free on any purchase is a wonderful feeling.

[SwampDonkey]

Congrats on reaching that milestone.

[firefighter ontheside]

Congrats on paying all that off.  It feels good.  We paid off my truck a year early just recently.  It didn't really save us a lot of money since most of the interest had already been paid, but it just feels good to know that money isn't coming out of our bank account every month.  Our house was paid off several years ago.  It's getting to where we don't have much debt anymore.  Oh wait, our oldest will be in college in a few years.  

[Patrick NC]

Congrats on paying all that off.  It feels good.  We paid off my truck a year early just recently.  It didn't really save us a lot of money since most of the interest had already been paid, but it just feels good to know that money isn't coming out of our bank account every month.  Our house was paid off several years ago.  It's getting to where we don't have much debt anymore.  Oh wait, our oldest will be in college in a few years.  

We are on track to pay off our mortgage in 20 years instead of 30. I need to work on that a little harder.  Like to make it 15 or even 10. As far as paying for college,  we got off easy. My stepson joined the navy right out of high school (16 Years now). Stepdaughter is married and doing well,  and my son started working with me last year.  But I do gave 3 granddaughters that we seem to spend a lot on!😁

[aigheadish]

Good for you!

I have the tendency to go in and out of debt every few years. I'll pay everything off then find some crap I'd like to have then go back to owing. Luckily, I think I'm getting to the point where the big purchases are about done, so that should help.

[justallan1]

Congratulations!
Paying things off or paying big chunks off early when you can is sooooo nice mentally.
Although I'm making my bills and payments just fine, my problem is I keep thinking I need a 4WD tractor.  8)

[stavebuyer]

Congratulations!
Paying things off or paying big chunks off early when you can is sooooo nice mentally.
Although I'm making my bills and payments just fine, my problem is I keep thinking I need a 4WD tractor.  8)

You do!

[DWyatt]

"Debt is dumb, cash is king, and the paid off home mortgage has taken the place of the BMW as the status symbol of choice." ;D

I'm glad I'm not the only one who thought the same thing. The freedom of choice associated with not being in debt is something I wish more people would realize. 

[Walnut Beast]

Awesome 👍💪

[Cedarman]

To me debt is like a chainsaw, just a tool to get the job done.  I am out of debt in Indiana, but have debt in Oklahoma.  But you can't save to buy a $630,000.00 grinder and support equipment.  Just need the sales to generate the income to pay it off.
If you are going in business in a big way, debt must be incurred unless you have megamoney in the bank from other sources.
Don't be afraid of debt, be afraid of not being able to pay off the debt.  So a good business plan is mandatory.
Being out of debt is a good feeling though.  I am enjoying it in Indiana.

[farmfromkansas]

When I got married, my mom gave me a copy of Ben Franklin's autobiography.  The thing has never gone out of print.  He lays out his plan to save money and how to live without debt.  Thing is, I could not ever build a spec house without a loan, but did operate my business on Ben's model.  Great read for your kids and grandkids.  I did notice a huge difference in the part Ben wrote as a young man, and the part he wrote when he was old. Should be required reading in school.

[aigheadish]

I think I've read that but will check it out again. It usually takes me a few passes before a book will stick with me.

[reride82]

To me debt is like a chainsaw, just a tool to get the job done.  I am out of debt in Indiana, but have debt in Oklahoma.  But you can't save to buy a $630,000.00 grinder and support equipment.  Just need the sales to generate the income to pay it off.
If you are going in business in a big way, debt must be incurred unless you have megamoney in the bank from other sources.
Don't be afraid of debt, be afraid of not being able to pay off the debt.  So a good business plan is mandatory.
Being out of debt is a good feeling though.  I am enjoying it in Indiana.

I totally agree. I refuse to make payments on something that isn't paying me back. Granted I have a fair amount of toys, but they were all paid for in cash. The guys that are financing ATV's/toys/luxury cars drive me nuts. A friend of mine has at least $150k tied up in toys/Suburban or bad debt as I call it. That same debt could be put into rental properties or equipment and it'd pay for itself. I have three rental properties with less that $100k left on the note that I'm making $2k a month after expenses. I should have invested in another one but I can't wrap my head around this new market.
Levi

[moodnacreek]

Constantly borrowing money means you must constantly make more money or else.

[Patrick NC]

To me debt is like a chainsaw, just a tool to get the job done.  I am out of debt in Indiana, but have debt in Oklahoma.  But you can't save to buy a $630,000.00 grinder and support equipment.  Just need the sales to generate the income to pay it off.
If you are going in business in a big way, debt must be incurred unless you have megamoney in the bank from other sources.
Don't be afraid of debt, be afraid of not being able to pay off the debt.  So a good business plan is mandatory.
Being out of debt is a good feeling though.  I am enjoying it in Indiana.

I feel the same way about debt being a tool.  No way that I could enjoy the lifestyle I live without it. What I am afraid of is interest. I try to borrow smart at the lowest interest rate possible.  Both my truck and tractor are 0%. I make higher interest debts priority to be paid off as quickly as possible. 

[Tom King]

When I was a young man, an Uncle of mine gave me some financial advice.  At the time, I thought he was just a crazy old man, but have since learned it was good advice.

He said, "Make money, not payments.  If you start making payments, you won't ever have any money."

I made one payment for my current truck.  That was in November 2000.  Some people say you come out better making payments, but their definition of coming out better is a little different than mine.  I don't want to worry about it.  Built our house out of leftovers from the building business in 1980, and have added onto it a couple of times the same way.

[GRANITEstateMP]

I've been working hard to minimize debt. Only thing left to pay off is the house. We try and pay a little extra every month, but at the same time I'm trying to build up our rainy bday fund a bit more before buckling down on that mortgage.  Low interest rate is helpful for sure. All my toys are paid for in cash.  No toy loans. If it doesn't help make money or is my house, it doesn't get a loan!

Awesome job PatrickNC !

[Larry]

A few years ago I read a book...."Richest Man in Babylon" by George S. Calson.  A classic fable about making and accumulating money.  Wish I had read it when I was 18.  If I had, I would be living on my own paradise island and drinking fruity drinks everyday. :D
 

[Southside]

For sure with the reality we face today you have two choices.  1) Work for someone else and let them decide what you are worth or 2) Risk what you have and what the future holds, but for sure find a way to force multiply your earnings.  I have gone both ways and for almost 20 years now selected option two and it's why we diversified and frankly why we farm.  Those hens, cattle, and fields go to work for me 7 days a week while I make money on the sawmill side of the business.  Yes, I have to manage things, and there are expenses to deal with, but my labor is force multiplied as a result of their input.  

Smart debt is unavoidable if you are running a business at my level.  There is no trust fund to dive into, no sugar momma to foot the bill, you need to keep expanding, so equipment, land, etc must be obtained and that means debt.  At the end of the day it's all about what you keep, not what you make.  

[YellowHammer]

One of the reasons we have a sawmill business is to get out of personal debt as well as business debt, although we consider them two separator things.

Personal debt is the debt that keeps me up at night, house, land, vehicles, etc.  We do everything to stay out of personal debt.

Business debt is the debt we incur to maintain or expand our business. It is a tool, like Cedarman says, and when a tool is used positively to get another tool, such as a new piece of machinery, then a business based decision must be made that the piece of equipment will more than pay for itself with increased profits.  No machine gets a free ride, and the portion of the profits form the machine goes into paying off it's loan, especially until it gets to a selling value where I can liquidate or sell the tool for enough money to pay off the debt.  At that point, we are at a financial break even point, and the pressure is off.  So using loans to increase business debt temporarily to further increases production, sales and net income, is a good decision.

A good example is a WoodMizer LT-70 sawmill.  We bought it because it would increase production and increase profit, which it immediately did.  So the increase in profit went to make the monthly payment, plus a little.  After a short time, the debt incurred was reduced where if we got in trouble, we could sell the mill to cover the loan.  So at that point, there is, in essence, no debt as the loan is covered.  However, as we kept paying off the mill, and it is fully paid now, then we have a positive value asset that we could sell and make money.  So for a business, debt isn't really the value of the payment, it should be offset by the selling value of the piece of equipment. At that point, there is no debt.

[Cedarman]

When you get a loan most banks want a financial statement.  On the statement is your net worth.
If you do one of these periodically, you should hope your net worth goes up if your business is actually making money.  You must be realistic about the actual value of your toys and tools, land and house, and vehicles. If you are paying kids through college, then your net worth may go down as the investment in education will go to your kids benefit.
Anyway, I like to see my net worth go up.  Then I know we are making money.

[aigheadish]

At that point, we are at a financial break even point, and the pressure is off.

I've played the stock market this way. I'm not terribly knowledgeable about stocks, so I play it with money I know I can lose. I pick companies that intrigue me in some way or trends that I see that look like they could be money makers. I also like to sit on stocks and watch them hopefully increase in value (and dividends!). That being said I've made a few sales that have paid for the rest of the investments, so while there isn't a giant pile of money there what is there is all free money, so I don't freak out too much if/when the market takes a dump. 

I play roulette the same way. Take a hundred bucks I can afford to lose, hopefully hit some, put the hundred bucks back in my pocket and play with the winnings. It doesn't work every time but it has worked a few, then I don't get too mad when I'm up 500 then go on an unlucky streak. 

[YellowHammer]

I agree, analyzed net worth is the proof off the pudding.  Increasing net worth is the target, although there will be some ups and downs, the running average should be positive.

[Peter Drouin]

I agree, debt is a tool. I'm talking to nyle. A200 is 30,000 plus.
Plug and go.
I could write a ck for it but, I think I will take a loan of half. Maybe 
Will see.
Going to see if they del too. 

[customsawyer]

Years ago when I was younger (brave and a little nuts) I had the forestry business. One thing it taught me was the difference between owing $100,000.00 and owing $1,000,000.00. When you owe a 100K you lay awake at night worrying  about paying it off. When you owe over a million your banker lays awake at night worrying how you're going to pay it off. This is a little on the joking side of things but extremely accurate.  
I'm with the others in that it is a tool. Just like a credit card. Use it to your benefit and go on with life. At this point in my business I am only willing to finance a piece of equipment if it will pay for itself within 2 years. I know that is a little strict but it is one of the rules I use. I don't care if it makes me a dime in the first two years as long as it doesn't cost me. I also like it to make my life easier.  

[Cedarman]

One of the reasons I like to go to Logging and Sawmill shows is to learn about new stuff and new ways of doing things.  I am always thinking of how I can adapt or not adapt the stuff I see to make my business easier or more profitable.
Just going to Jake's I saw him squirt some stuff on the planer table to make it a lot slicker.  We have always used wax.  So I did a little research and came up with a product that Swamp Donkey uses.  Also am going to try Biolube.  They sent a free quart for me to try.
Will see what the jury says in a few days.
It is not always invest cash into a business, you can invest time.  Spent 3 1/2 days going to Jake's.  Time and money well spent. Just the fun was worth it.  But learning can make you some good bucks too.

[Peter Drouin]

I pick up things just watching the vetoes. 

[stavebuyer]

Debt is always a gamble unless you have the cash to pay in full but can borrow on better terms from the bank than using your own funds. Often the best deals come to those who have cash to pay and they may not even be a direct line to your business.

It's all well and good to flow chart your P&L until something like Covid, Ukraine, election of some whacko's who think your business is the sole cause of climate change or social injustice lays waste to your plans.

The new loader, kiln, edger or whatever purchased with borrowed funds suddenly becomes an anchor if the mill burns and can't be replaced for 2 years.

Having said all that most likely you have to take some gambles to ever get a foothold. If you have built enough equity, you may well be in the position to overcome a disaster. Keep doubling down and the odds will eventually catch up to you.

[moodnacreek]

Nothing ventured, nothing gained. Timing is everything. I never liked the description shrewd but that can be necessary to survive.

[Cedarman]

Many are the people who failed in business only to pick themselves up, start over and become wealthy. And I am sure there are many who failed in business, gave up and went to work for the "Man".  Fear of failure, disaster, the future, has kept many working for the "Man" instead of diving in .  Fear freezes some, motivates others.

[Southside]

2008 taught me a lot of lessons, I managed to survive it, and became a whole lot tougher because of it.  Survival was a case of luck - there were many bigger fish to fry so they got more focus - and tenacity, more than preemptive strategy.  Just keep swinging, and swinging, and swinging  - sooner or later you will hit the ball. 

[Resonator]

I've heard it said that someone in business who's made a million dollars and lost it, is more likely do it again. They are confident in themselves because they know it can be done.

Also poor people just make things happen. If a caveman wants brontosaurus burgers for supper, he knows he's got to go out and knock one down and drag it back to the cave.

[YellowHammer]

Martha and I have a saying that every big financial decision we ever made started out with a "What in the Heck are we about to do?"  Then we did it.  It helps with lots of research, and them lots more research, then hard work, then smart work, then using the power of money to make money.  Money is a tool, an expensive tool, but nothing more.  Using a wrench to turn a screw doesn't work very well, and using money the wrong way also doesn't work very well.

Preaching to the choir, many of the people contributing to this post have certainly been there and done that with success.  

[SawyerTed]

The old saying "It takes money to make money" is absolutely true for business.  It is difficult for a business to operate completely debt free and the advantages really aren't there to do so.  Leases, business accounts at suppliers, acquisition of machinery or equipment, installation, building expansions etc. all require the funds and the advantages of using debt to accomplish those things outweigh purchase.  It all has to be very strategically done.

On the personal side, delaying gratification of wants is the biggest factor in minimizing debt.  Fun money is too easy to get and too hard to pay back.  Interest rates on credit cards and toy loans can be overwhelming.  It is a slippery slope.

It took me along time to realize that my friends are financed to the hilt to afford the the stuff they "own" and the things they do.  A very good friend is so over extended that he barely has money to put gas in his boat for a day at the lake.  The freedom of not being personally financially extended to the limits is liberating.

[customsawyer]

Don't know why but reading this reminded me of a old saying. "The timing of a rain dance has a lot to do with the outcome." Guess what I'm trying to say is if you are going to get a loan make sure it is the right time for you or your business.