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nc ks | I have been fixing my interest rates on machinery for several years. The last couple years have been good and i have been able to pay down a lot of debt. My question is in these times, would it be better to have more fixed interest debt? If I purchase machinery to delay paying income tax,(I farm in Kansas, the extra income thing will take care of itself before long) should i go ahead and get a fixed interest loan on it instead of using my cash? Should i instead stick the cash into as many crop inputs as I can. I have already stockpiled a lot of my needs for next year. Or should I just hold on to the cash and buy the rest of the inputs as I need them next year?
One thing I am trying to avoid is using cash on equipment and then needing to borrow for inputs (line of credit) because i can control my interest rates and payment period better on the machinery.
I am a little leary of holding on to cash in cash form because of inflation.
On the commodity side, should I hold on to my grains until I need to convert them to cash as a hedge against inflation? Or should I market them as i see fit as far as price and let the chips fall where they may?
Is fixed interest debt actually a good investment in these times? I wouldn't do it but would it actually be a good investment to borrow money on paid off machinery (equity) and buy more stuff that will likely appreciate? I am almost worried that I have paid down my debt too far. What are the pitfalls of doing this other that deflation concerns?
Edited by kb ag 12/17/2009 14:07
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fixed interest debt and holding commodities
