Ian and I did everything right from a financial standpoint during the 1990s. We worked hard at multiple jobs and earned decent wages. We paid off two mortgages. I even managed to maximize my RRSP savings.
We entered 2000 with sterling credit ratings. Then we decided to build a large farm from scratch on 220 acres of land.
The house we built was large. It was a seven-bedroom, two-bathroom one-and-a-half-storey wonder with approximately 1,500-square-feet on each level. And then there was the full partially finished basement.
Why such a large house for two people?
We had been wanting to provide respite care for developmentally challenged individuals. But our previous two houses had been a way too small to even consider such an undertaking. So we went large.
Once our farmhouse was built, we had plenty of space. But as we explored the respite care for developmentally challenged possibility, we learned that we would be responsible for providing transportation into the city for activities. This didn’t exactly fit in with my work schedule. So we considered international students. This, too, involved transportation responsibilities on a regular basis. Finally we settled on a farm bed and breakfast. This worked to some extent. We had a few bookings over the year, and our guests were at least independent with their transportation needs. But some of them were a challenge in other ways. Read my post re: operating a farm bed and breakfast.
The barn was as big as the house with a full hayloft. Then came the workshop, which could easily have been renovated into a cottage. And the 3,000-square-foot greenhouse.
One doesn’t realize how costly building is until you are finished and begin toting up the bills. Building gives the builder the opportunity to create exactly what he or she envisions But from a financial standpoint, in almost every case, it is much more economical to buy a property with buildings already on it.
And building a farm presents unique financial challenges. We were able to acquire a good mortgage on the house without any problems, but most mortgages will consider only the house and 2-1/2 acres. That left out the barn, workshop and greenhouse. Farm mortgages are a possibility, but the farm appraisals needed to acquire them can be costly.
A farm just wouldn’t be a farm without some equipment (even if most of it, with the exception of our tractors, came from farm auctions). And we needed supplies for the greenhouse operation.
We proved to be very successful raising birds and animals. They needed feed and lots of it. During our peak, we paid what for many people is a full year’s salary on animal feed. And because we were a “no-kill” farm, our only source of income was selling breeding stock (or in some cases farm pets), fleece and fibre, plants, vegetables as well as income from the bed and breakfast and donations from farm tours.
A good credit rating is both a blessing and a curse. The blessing is that you can get “good credit” (mortgages, car loans) when you need it at reasonable rates. The curse is that you can also be approved for a lot of credit card debt, until the credit companies finally catch on to the fact that you have an enormous amount of debt attached to your name.
Debt tends to feed itself. You need more to stay on top of the debt you’ve already accumulated.
Unfortunately there is no easy solution to breaking free. I ended up working two full-time jobs simultaneously and still struggled with the debt load. My only consolation was that I knew it had gone to creating what to me was a beautiful thing: Noah’s Farm.
One of the best debt-reduction programs I have discovered is a simple debt-stacking program that is sensible but unfortunately out of reach for many of us. That is to pay off the highest interest-bearing credit card account or line of credit first by meeting all of the minimum payments but not adding to that debt. Once that is paid off, continue to pay the amount of that minimum payment toward other debts (paying the minimum payments without adding to those debts). This process will accelerate until all of the debts are eventually paid off!
Debt is a cruel taskmaster. It still haunts us, even though we sold our farm two-and-a-half years ago. Was it worth it? The debt is dreadful, but the farm was beautiful. I certainly do not regret the experience, all that we learned and the many lives that were created because of the farm.
But once we are finally free of debt, I will strongly advocate that we never borrow another dime again!