| kst1 - 9/25/2021 11:05
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.
Your banker or who ever your dealing with will have the say.
If there any good will give you some feed back.
Your trying to have more cash.
I’m nobody but lived around and through this same question.
Banks like you when there’s little risk.
If your sinking they really don’t care.
Uncle Sam backing is where they care little less.
If your going to grow big. Outside the norm finance and/or working At McDonald’s part time.
Key
Can you spot opportunities or what people say should happen.
I know guys pulling reefer(joke there somewhere)that was touching $10k a week with a single driver.
For me this unheard of.
As soon as that load is booked the money can be deposited.
I know of people that dragged there feet and ho hummed and complained.
But I also have seen the ups and downs.
I see some going out of business because they followed the fairy tale of Gov money for greener trucks(I’m all for better).
Story time
You can spend it all no matter how much you make.
Is the knife sharp or dull.
Eat beans and pay tractor off.
It will free up opportunities.
My Banker relative would probably disagree.
If you can pull it off it might open doors later on.
But as always poor side tracks and may need $5 for soup money.
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Creation of working capital
