Should You Be Committed?

Not long ago, I was approached by a Client who said he wanted to own more land. With his 3,000 cow herd, we agreed that it made a lot of sense. He could grow more of his own feed and probably decrease his overall feed costs.

“What about the down payment?” I asked. He had no excess equity in his land base to borrow against, so I explained that he would need 30-35% of his purchase price as a down payment. His lender would then provide the rest of the money. Buying 100 acres at $10,000/acre would cost $1,000,000. This would require $300,000 to $350,000 for the down payment. “Where am I going to get that?” he asked.

Actually, I was glad he asked. I suggested that he start putting all odd amounts of income, e.g. USDA funds, bull calf money and at least part of his cull cow money into a separate savings account. My intent was not to draw that fabulous 0.01% interest we currently receive on any savings, but rather it was designed to segregate these funds from his checking account, with the sole intent of protecting the money from being spent. I call it AGS – Acute Goal Savings.

This went fine for about two months, after which I asked how much had been put away. “Well, I just recently quit doing that!” Of course, I asked why… His reply was, “It’s just too much of a hassle. Besides, the bull calf money is my ‘fun money.’” Wow, I thought, this should represent worlds of fun in 2014!

I tried to rationalize with him, “Well, if you get the additional 100 acres, won’t your profits go up and provide you with even more ‘Fun Money’?” His reply: “Nah. That’s crazy.” It made me wonder if I should be “committed” for suggesting such crazy things…

Now, contrast that with another Client who milked 600 cows. I suggested the same AGS concept to these two brothers. They started it two months later and, after just 18 months, now have $50,000 in their AGS account. Within the next several months, they will have enough saved for the down payment on their goal of building a new fresh cow & maternity barn! This should reduce their over-crowding, boost their fresh cow management, and increase their herd’s milk production.

What was the primary difference in these two examples? In total dollars, the 3,000 cow herd owner’s dream was considerably bigger, but he lacked the “commitment” to the objective. In contrast, the 600 cow herd owners needed fewer dollars. However, the real difference was in their level of commitment, that necessary ingredient needed to convert their dream or goal into reality!

It takes both a Goal and a Burning Desire, also known as commitment, to reach your goal. With that in mind, I will leave you with a simple question: “Should you be committed?”