Sunday, January 24, 2010

Open Finances

first off, I apologize this post has no pictures. I know that in the short term blog posts are better with pictures, but I'm hoping to do with this blog what is severely lacking with others. You see, all the farm blogs I've read started long after the farm got it's first animal. While they still document trials and errors from that time on, we're not at that stage yet and I have very little resources to use to get us there. Common sense and hard work go a long way, but in the future when we're famous farm bloggers I want this post to exist in the archives.

That all being said, before we can pay our bills with a farm income alone we need to eliminate our debt. Right now our debt makes up a significant portion of our expenses and the faster we pay it off the better. This is precisely the type of stuff a lot of people are bashful about but, as I said before, the more information out there the better. So, some numbers to start with.

Our debt:

Mortgage: $115,000 at 4.75%, $600/month for 30 years.
Big Man's student loans: $18,000 at 3.5%, $100/month for 20 years.
Johnson's student loans: $41,000 at 6.5%, $275/month for 25 years.
Total: $174,000

If we pay the minimum amount every month we will pay $325,000, a total of $151,000 in interest. The faster we can pay this off the less money wasted in interest payments. For this reason our #1 priority is to get out of debt as fast as we can. How?

Well we have a few tricks up our sleeve. First, if we're able to get a natural gas lease we will get a bonus payment of $60,000 to $130,000 after taxes, all of which would go towards this debt. Most likely this will happen in the next 5 years, but we're not hanging our hats on it, so what can be done in the mean time?

Reduce our living expenses and raise our income. Living in this rural area, even with our higher educations, pay rates are lower than in cities. At the same time our cost of living is lower so it's a trade off. If I were in a major city in a period of economic prosperity I could probably make $25-$30/hour with my skill set. Out here I'll be happy to make $20 and settle for anything above $13 (speaking of which I got a job recently as a machinist in Ithaca. I start on Monday so we'll see how it goes, in the interest of disclosure I'll be making $15/Hr.) Assuming we can both get full time jobs making an average of $14/hr, working 50 weeks a year we'd net ~$41,000 after taxes. During this time we'll hopefully get raises, and always be on the lookout for higher paying jobs, so $41,000 is just a base line, but we'll run with it.

What are our expenses, you ask? Well here's a rough monthly breakdown, based on the last 5 months:
Debt: $975
Groceries: $350
Eating out: $60
Utilities: $260
Fuel for cars: $45
Auto maintenance/Grease filtration costs: $180
Things you can buy at Target: $125
Property taxes, insurance: $275

Total: $2270

What this does not include: Any renovations to the house or farm, farm expenses, holiday and travel costs. So that's ~$27,250/yr just to keep our heads above water. That's $13,750 above and beyond that we can put towards the debt each year.

If we do that, we could pay off all of our debt in 8.5 years, paying only ~$40k in interest and saving ~$111k in the long run. Not bad, and although it'd delay a lot of our projects it would be well worth it.

here's the craziest part, for every $100/month more we put towards the debt it cuts 6 months off the length of the loan and $2,500 in interest that we won't have to pay. This provides quite the incentive to be thrifty.

The two biggest things we're doing so far to save money is heating the house and running the vehicles on Waste Vegetable Oil(WVO). the Auto maintenance/Grease filtration cost number is high because I've been dealing with some growing pains and I think that will go down, but even if it stands as it is that's $2,160/yr instead of the $5,400/yr we'd be spending on Diesel. Can't shake a stick. This year I'd like to devise a system for heating the hot water with WVO which will save us about $40 a month, I hope.

I also plan to get rid of my Iphone, that's $90/month. We'll get a VOIP line and some burners for the cars in case of emergency. Speaking of which, if anyone's interested in an Iphone 3G in good condition with about a year of contract left, let me know.

Where else can we cut costs? Well, I think the numbers for "Auto maintenance/Grease filtration costs" and "Things you can buy at Target" are a bit high due to our recent move, I think we can bring them down to $100 and $75 respectively, saving another $130/month.

That's $260 so far, or 14 months and ~$5800 in interest. This year we're going to invest heavily in the garden, and while I think we'll about break even in 2010 the following years should see a reduction in grocery costs by $50/month or so. By 2011 I'd like to be raising some of our meat, and while that may not be much cheaper than grocery store prices it will be better quality. We'll call it $50/month.

but wait, here's the best part:
At the end of this period, be it 8.5 years or 6.9, or even sooner if we get that big natural gas lease, we'll be at a point where our yearly expenses will be $11,220, or 49% of what it is now.

Now, which is easier, running a farm that nets $215 a week or one that nets $437? Even if we decide not to farm at that point and just work we'd only need to work 22 hours a week between us at $15/hr. in order to pay the bills.

Anybody else have ideas on how to scrimp?

Sunday, January 17, 2010

Catalog Season

Well, it seems that winter is indeed a slow season for farmers, even farmers who don't actually farm yet. The fact that we're on pace for the coldest winter in 20 years around here doesn't help, neither does that fact that we're a little cash strapped this month (c'mon IRS....). A need to conserve cash and fuel has left us with not much to do but make plans for the year, eat a lot of soup, bake a lot of bread (props due to MBG of uptown oven, whose long distance coaching advice is already invaluable) and catch up on some tv series that we missed the boat on (Mad Men is single-handedly responsible for irrepressible urges to sometimes drink scotch in daylight while brooding, or wear heels and lipstick around the house to do laundry and make beds).

I was jolted out of my semi-hibernation last week, when seed catalogs began to show up in the mailbox. I love these things. The excitement of the newly available melon varieties!! The hysteria induced by the heirloom tomato variety that promises to be both cold hardy and juicy-sweet!!! After a few days of fawning over the pictures and descriptions, I have circled varieties, decided how many plants of everything I want, and finalized a garden plan, complete with calendar of events and a foot-by-foot, color-coded description of what goes where.

Perhaps I am going a little overboard...we're talking 51 (!!!) different varieties, from practical yellow storage onions to the blue potatoes and rainbow carrots that the Big Man insisted on. (Um, and not counting the herbs. Or *cough* the perennial garden....) Even so, this represents a herculean demonstration of restraint on my part -- I have forsaken kohlrabi, fennel and red orach to a future garden.

The garden plan makes the countdown to spring official and immediate. We have a month to build some indoor infrastructure...seedlings start taking over all the southern-facing windows in early March.

Tuesday, January 5, 2010

NYE Wrap-Up

I am pleased to announce that the First Annual Farm House New Years Eve Party was a success. With a peak population of 19 humans and 2 dogs, not only was it a fantastic time but I was happy to discover that the heater, septic system, well and water filtration system and the house in general handled a crowd well. There was sledding (down a hill and into, unfortunately, our only semi-frozen pond), singing around a camp fire, sliding around and snowball throwing on the frozen lake, some heart to heart conversations and a couple really important breakfasts.

Despite our general debauchery and the rolling arrivals of guests, we managed to do a short but sweet work project -- demolition of all the old animal pens in the barn that don't fit with our barn plans. We had ten or so bodies and an odd assortment of sledge hammers and crowbars, and got an amazing amount done in just a couple hours.

Our excitement about large group work days (or, you know, weeks) has been redoubled, and we're already making plans for a summer session of working and playing.

Also, any participant who has photos of the trip, please send 'em along, as the usual TBA Farms photographer (ahem) found herself so overstimulated and excited by guests and champagne and whatnot that there is not much un-blurred documentation of the affair.