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| I have one of those ideas that throws up red flags but I'm just trying to beat inflation. But I want to get shredded for being an idiot so I'll leave it out there for just that.
A little background... 34, Dad is retired and I've doubled acres in 5 years (mostly rented, I did buy an 80). Equity position is around 40%.
I bought a 180 Magnum tractor last year and am getting ready to make the second payment. I paid 85k for it, traded a 7120 I bought from Dad (was paid for) to get it. Financed it for 55k over 5 years, interest is in the high 3% range 5 years. I want to keep the tractor another 10 years or so (I put on about 200 hours a year so that would take it to about 4000 hours). After this payment I will owe around 35k (due over 3 years).
So the question we're finally getting to... I'm considering remortgaging this tractor to create a little working capital right now. With high input prices and interest rates still low, I can lock in interest over 5 years on a chunk of money that will be real close to my rate on the operating line while there's no room to move down but potential for it to move up. If I remortgage 80% of the value of the tractor, I have 80k - 35k due so I create 45k of money with locked interest rates and money I can spend to lock in inputs for next year.
Tell me I'm nuts or that there is a hole in this plan. | |
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Creation of working capital
