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How can we mitigate the potential for a double dip recession?

Started by scsmith42, March 13, 2011, 03:40:08 PM

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scsmith42

During the past few months I've seen an uptick in enquiries at my wood business.  Sales are up slightly, but the enquiries even more so.  This also holds true for some ads that I have running for surplus items.

Thus, I have been encouraged that slow progress was being made in emerging from the recession. 

However, the recent increases in fuel prices are leading me to believe that will be a strong likelihood of a double dip recession if things don't change.  Fuel costs were one of the triggers of the problems back in '08; although folks were overextended financially, the house of cards fell down when transportation expenses doubled and discretionary income disappeared for the average folks (as well as the resulting impact to business from energy costs as well as loss of the construction markets.)

Politically, there is a growing awareness of the dangers of out of control spending, and God willing, as the folks keep pressure on the Pols there should be some direction changes forthcoming.  I view the emergence of the Tea Party as a good thing in this area.

However, what I'm wondering is what steps can the average folks take - i.e. FF members - to counter increasing fuel costs and thus not have to cut the rest of our spending down to zilch.  Because if we all quit spending $, a second recession will be not only become a reality - it will be much more painful than the last.

Back in '08 the Doc and I sought to mitigate our costs by buying a Prius -parking the Excursion and F450 unless we absolutely had to drive them.  Even after the car payment, we're still $ ahead over what we would have spent on fuel alone at $4.00 per gallon.  I pay a lot more attention to my driving habits now too; and rarely jump down hard on the throttle in any of my vehicles so as to reduce fuel consumption. 

We also started grouping our trips, and picking up things for one another so as to minimize our needs to travel.  If we could not get the other to pick something up, we would schedule our trips so that we could use the Prius as much as possible.  We buy a lot more items on-line if the UPS costs are less than our transportation costs would be.  This has a negative impact on local retailers, but at least we're still contributing some $ to the economy.

We are also paying much more attention to the country of origins for our purchases, and keeping the $ in North America whenever possible.  Wal-mart is a much more frequent destination for items now too.

I don't like the idea of being dependent upon the Govt to make things work out, and thus figured that it would be beneficial to get a discussion going amongst our FF community on ways that we could positively impact our economy.

Thus, what ideas do y'all have regarding how best to mitigate increased fuel prices, so that we can keep our $ in circulation in our own economies?
Peterson 10" WPF with 65' of track
Smith - Gallagher dedicated slabber
Tom's 3638D Baker band mill
and a mix of log handling heavy equipment.

Tom

It's not just something that FF people can do to keep their money in circulation, it has to come from higher up.  Perhaps not from the Government, but it has to come from those who are doing the selling and managing.

You mention that ya'll bought the Prius and parked the 450.  Many of these guys strained at the pocket to get a 450 so that they could run a business and had no room for a second vehicle.   They had to use it to take the kids to school so that it would be there to haul the lumber, mill and slabs. 

Making Walmart a more frequent destination for many is just allowing them see the status that so much of America lives, where Walmart has been their high-end store.  Much of America doesn't even think of attending an outlet of more stature than Walmart and there are few stores where they can find lessor deals.  It's the Dollar Generals and Dollar Stores that circulate the dollars of the masses.

There is a big status difference in shopping for chuck steak in a Publix (status grocery) and having your steady diet being chuck roast from Piggly Wiggly and have to start buying chicken instead.

Our Governments Bureaucracies, like the DOT and USDA are the most instrumental in either shutting down the economy or allowing it to grow.  The red tape of Federal driving licenses, mandates for ridiculous amounts of insurance, rules and regulations of safety and the intimidation from inspections has shut down more small business than the thieves of Wall Street every dreamed of affecting.

You can't spend money that you don't have.  You can't have money if the means of earning it have been taken away.

We need, not only an administration change, but a philosophy change at the top.  Nit-picky laws that make the Gated-Community-people smile, need to become a thing of the past and the average man should be able to start and run a business with fewer Government hoops.

The philosophy of big business must change too.  These self-serving never-got-their-hands-dirty people who run the companies that are going off-shore without considering the damage they are doing to the Country are the ones who should be taxed out of existence.  There needs to be penalty for turning ones back on his country.

Local law enforcement as well as State and Federal Law Enforcement needs a wake-up call to remind them that they are there to protect the citizen from errant behavior, not to direct the general population as if they were directing auto traffic at a football game.

The average "Joe" needs to stand up on his own two feet and make an effort to support himself.  The needs of the Union are long gone and this "crap" in Wisconsin is the prime example of how many look upon their "right" to be given money, over their responsibility to do a job.

I don't fault any FF member for sticking his money in his pocket for a rainy day.  His hope is that he will be able to survive until a better day and better prices.  His only tool is to quit buying.  So far, his only view has been higher prices, higher taxes and a bigger Government thumb whose Bureaucracies threaten fines and incarceration.

I'm all for everybody pocketing their change.  :)

Mr Mom

We dont go anywhere and dont buy anthing that is not needed.
Trips become a famliy thing when one person goes to a store they call the night befor and see if anyone need anything.
Garden is getting bigger this spring.
Talked to several people about gas prices and if gas does hit 5.00 a gallon they will have to quit beacuse they make min wage and it is not worth it to work.

Thanks Alot Mr Mom


red oaks lumber

the average consumer doesn't spend budget wise that much on fuel costs. the last great recession we are slowly crawling out of was the perfect storm so to speak, the high fuel cost was the last weight that broke the back of the us economy.
everyone has to take their own finacials responiable ie; managable morgage,small or no vehicle payments basicaly living with their means so when we keep having rising fuel cost we aren't turned on our heads.
i feel until things are rolling better again places like walmart and other cheap import places will continue to thrive, if you only have a limited amount of cash in your pocket chances are you'll want to parlay your money for the most amount of goods you can. this action long turn doesn't help anyone but, try reasioning that when you are faced with that dilemia every week.
for me the constant rise in electric cost is the hardedst cost to some what keep control of, using 14,000 kw per month small increases add up how do i cut electic costs? ya don't run equipment but, not runniong eq. not making product not selling things ect.
until this country can real in all the greed,i don't think we will see any long stable growth in the economy. my parents were over last night for dinner and like alot of families across america the topic of the shape of our country is discussed, my dad who is 70 something said " i'm glad i'm at the end of my life not the begining" for a man that loves life like he does wow that is hard to swallow. but i't makes one think.
the experts think i do things wrong
over 18 million b.f. processed and 7341 happy customers i disagree

tyb525

I too work min wage, at only 15 hours a week (can't get any more than that), and go to school. I get some income from sawing also, but nowhere near enough. It's pretty much all I can do to pay for cell phone, insurance, and gas. The cost of the gas to drive to work and back everyday is half of what I make per day, or more. There's no way I could afford to pay for rent at this point.

I've had to start doing pretty much anything I can to make money, things like hauling scrap, selling firewood, mowing, handyman work, and basically anything else I can do.
LT10G10, Stihl 038 Magnum, many woodworking tools. Currently a farm service applicator, trying to find time to saw!

Doc Hickory

Whether the pink diaper crowd running DC like it or not, we are an economy which runs on oil. We need to develop a stable supply, stable both in production and price. During the Carter administration we got our first taste of being held captive by our own energy needs. There was no shortage of oil, just the determination by a cartel named OPEC to gouge for more money by limiting supply. The last price spike back in '08 was fueled by speculators and the outcry was to limit their ability to drive prices either up or down. Apparently the result of that outcry was exactly NOTHING. The ugly truth is that the developed world could give a rats rear end about the Middle East except the fact they have control of a commodity that we need.
Wall street and the bankers get their bailouts to the tune of billions of dollars. What does the average Joe get? The uncertainty that he'll even have a job next week and the likelihood that his retirement will both be delayed and be much more humble than his plans had foreseen. The little guy can do little more than ride out the storm, not having the wherewithall to affect things to a significant degree.
I'm shopping for clothes at the Goodwill Store. I look for the red mark down labels at the meat counter. Years ago I took $100.00 a week to live off of while trucking all week, now I take $60.00, and usually bring $20..of that back home with me. I don't eat high on the hog, and as a matter of fact, I'm having a little trouble remembering what the hog looked like. I harp at people to cut the lights out when they leave a room. I scrounge for parts to build the things I can't afford to buy. My wife has become the Queen of Couponville. We still have a roof over our heads, food in the cupboard, and the wolf isn't howling at the front door, but I did see him doing laps around the rose trellis this morning. In 2008 I had my best year ever, and I worked for every dime of it. In 2009 I took a $7,000.00 wage cut. In 2010 I took another $7,000.00 wage cut. I figure in a ferw more years I'll have to write my company a check for the privelege of working there. Every well has a bottom, and I'm sucking mud. I'm not alone in this mess, either. My kids are grown, all but one has flown the nest. I don't know how young families and those who are the 'working poor'' are surviving.
Both major political parties are just that, concerned about their party and not the nation. This country has forgotten that everyone has to live, not just the well heeled fortunate. Corruption runs rampant and the bad guys never seem to do any time in the big house. Why should the common man respect the law when the law turns a blind eye to corruption? It's a recipe for anarchy.
The USA is a republic, a system based on law. If that bedrock of law is eroded, the contract between the governed and the governors fails, all bets are off.
I'm not the oldest person here by a stretch but I've lived long enough to learn a few things. Politicians trot out the Constitution and the Bible right before election time. When they get elected (or re-elected), they put them both away until the next election cycle. I've found the Bible and the Constitution work every time they're applied. Our system needs a major tune-up, and it's our responsibility to turn the wrenches.
Feed a fire, starve a termite...

Ironwood

We have always lived VERY resourcefully (cheap). We often chuckle about how are thriftyness is now in fashion. I could go on and on, I wont belabor the point, we're TIGHT. Our monthy living expenses are minimal, biggest bill is high quality daycare for the two youngest, it is steep, but finite. couple more years. Utilities are low, home heating is silly low (well insulated smaller house), taxes VERY low, house payment low (most folks car payment in the "burbs"). I have institiuted a no credit card policy for myself, wifey doesnt have one anyhow. I am paying down my balance. I have purchased several capital assets in the last year, they are long term vision type purchases. They are due to newer machines (trucks) having $$$ computers that will go bad and cost BIG $$$. I bought two 2000-2002 trucks that are long term "wisdom" moves for the money I paid.

Scott, the double dip is here, we are thrify as ever. I still find opportunity, just think a little smaller, a little more local. Watch where I drive, maximize.

Tom,

"Many of these guys strained at the pocket to get a 450 so that they could run a business and had no room for a second vehicle.   They had to use it to take the kids to school so that it would be there to haul the lumber, mill and slabs."

WATCHET buster :D I haul kids in F-350 (Shinn's), or either of two 550's  :D

Things are still moving for me, mostly commercial build out, supply side stuff for me. There is little discretionary spending. Money is a steady flow, but not nearly what it used to be. Things will come back, but it will take years.

Ironwood

There is no scarcity of opportunity to make a living at what you love to do, there is only scarcity of resolve to make it happen.- Wayne Dyer

Gary_C

Quote from: scsmith42 on March 13, 2011, 03:40:08 PM
Thus, what ideas do y'all have regarding how best to mitigate increased fuel prices, so that we can keep our $ in circulation in our own economies?


Best thing to do is avoid pessimism, at all costs and look for ways to make money.
Never take life seriously. Nobody gets out alive anyway.

mrcaptainbob


mrcaptainbob

My wife has never been one to do coupons. She's changed her habit on that. And we do often check with the neighbors when making a run to town for anything. I've been in that mode for the last eight years because of where we live. It's no longer an eight minute jaunt to the box store. The nearest one of those is now twenty five minutes...one way. So when I'm in 'town', there's a shopping list of parts. When I visit family or friends in the city, there's a shopping list. Oh yeah...and in my County (Jackson, Michigan) the gas is always a minimum nine cents more a gallon. Usually between thirteen and nineteen. So when I go out of the county, many empty gas cans go with me. Food-wise, we do have a fair sized garden. And the neighbors are developing their own, too. A local farmer had a small supply of sweet corn seed in left in the hopper and was kind enough to plow up and plant about an acre for us all. His workers, and the few residents in the area helped themselves over the harvest of that. We still are enjoying the cobs at this late date! We also share our bounty with each other. Some grow potatoes, others are successful at squash. We trade and give the excess to family and friends. I was born and raised in Detroit and am pleased with where I am now at. A much better way to live!

LOGDOG

Two words: NATURAL GAS ....seriously. We have an enormous amount of the stuff. It'd be decades before we even put a dent in our supply, thus the extremely low price of Nat Gas at sub $4.00/per mcf for far too long. There's no demand relative to our supply. In 2008 it seemed like every Shale play in the USA came out of the woodworks. Suddenly we have a glut of Nat Gas.

We need an Energy Policy that includes Natural Gas ASAP! We need to stop fighting these wars in the middle east, trying to stabilize these countries and protect their oil resources and instead spend the billions and perhaps trillions of dollars that we're spending on these wars on tax incentives for America's business owners and citizens to switch over to Natural Gas wherever possible. For whatever reason, Obama just hates the words "Natural Gas" and avoids them wherever possible. I've only caught him say them 2 maybe 3 times max in his discourses.

Natural Gas is the only bridge fuel we have capable of fueling heavy truck traffic. Heavy truck traffic is said to account for 25% of our oil consumption. Take 25% of America's demand for oil off the market and see what happens to the price. We're 5% of the world's population using 25% of the world's oil. We can power our electric generation plants with Nat Gas. Coal and Nat Gas are competing for that market currently. We need to get Nat Gas competing for the transportation market and unleaded/diesel consumption. Stop turning our food into fuel. Ethanol is ridiculous and the numbers are all wrong on it.

The infrastructure necessary to support the demand for Nat Gas will create jobs. We need pipelines to transport the Nat Gas. Stations and pumps to distrubute it, drilling equipment and personnel to bring it online, steel producers making pipe and fittings, lots of trucking getting everything where it's going, manufacturing new autos to run on CNG ....... the layers of employment that it would bring are unbelieveable. Not to mention the spending. Starting with Oil and Gas companies leasing the land for drilling from landowners in America. Followed by royalties to American taxpayers not Saudi Sheiks with 500' yachts.

America needs to wake up and realize that tomorrow tends to get here faster than you expect it. It's time we re-tool America's energy consumption. Right now. That's our first step towards keeping our money at home. If we can throw money in the garbage for "Cash for Clunkers" I think we can justify re-tooling America for the sake of energy independence.

Not sure if any of you heard Donald Trump on Rush the other day but he was awesome. I'm not normally a huge Trump fan but he totally nailed it. He says, "How the heck are we supposed to create jobs when every thing we buy is "made" in China or somewhere else? We're not making things here like we used to and we're buying more from other Countries than we ever have." Amen brother.

His next point was this, (paraphrased but basically) "Why do we keep defending all these other countries on our dime in return for nothing? He talked about South Korea and us sending ships over there to stablize that whole situation with North Korea. Why are we involved? It costs a $100,000.00 just to turn the engines on in one of our warships. He said South Korea should be writing us a check for $100 million dollars for the protection we provided them." I tend to agree.  I'm all for protecting our borders and keeping trouble out but not this chasing around looking to get involved in situations. I understand we need to be able to export goods and that it's a large part of our existing economy and that stability in other nations plays a role in this but we're way out of balance on military expenditures for countries that will never be fixed. Spend money blowing these countries up and then spend more taxpayer dollars re-building them. How about we spend money on block grants in America's cities instead?

There's a saying that "a fool and his money are soon parted". That saying unfortunately fits a lot of America, not all but a lot including and especially the Government.

So the way to stay healthy and sane in this environment? Pay down debt. Yes America's economy is one that's built on and dependant on consumer spending but the model is a tad broken at the moment. Us spending into it is like taking a leak on a forest fire. We're not going to put out the fire and we stand a good chance of getting burned. Be a 5%'er. Do the opposite of what most are doing. Pay down debt, save, buy tangible investments, maybe even some gold and silver. Make it a point to do business with those in your circle whenever possible. My chiropractor told me he's a member of a business group of professionals. They tracked it once and they found that a dollar exchanged hands inside their group 11 times before it left the loop. There are ways we can do that in our lives. I'm not saying go all "protectionist" or anything like that. But realize this, mankind has been around for thousands of years, depending on your beliefs maybe 6000 'ish years. Only in the last 200 or so have we seen mankind excel and invent technology that would change our lives. In that 200 years it's extremely noteworthy to chart it and look at what segment changed the markets the most. This would be the early 90's or so forward when the internet was coming on line. All of a sudden information was available like never before and we experienced an accelerated state of growth in a very short period of time and this was reflected by indexes like the S&P 500. So a lots happened since then. What we need to ask ourselves is, "What could possibly change our world in a monumental way, and to the extent which the internet changed our world and the stock market?" Thinking ........ thinking .......not much. It would take something huge. I don't know what it is but I do know that advances in Energy could play a major part. In the meatime, don't look for the stock market to make a bull run for 14,000 on the Dow anytime soon. 13% of America is on food stamps and housing prices just bottomed in most of the major metro areas again about 2 weeks ago with a couple million foreclosures just waiting to topple real soon. This isn't fixed by a long shot. And QE2 is fixin to end on June 30th I believe. Wait until the Fed goes soft on buying $1.7 Trillion dollars in Treasury Bonds that are currently creating this artificial liquidity in the marketplace. I doubt there is going to be a QE3 and without it money is going to tighten up quick and the economy with it. It's funny money. Bill Gross, CEO of PIMCO Funds, named "Fixed Income Fund Manager of the Decade" runs the world's largest Bond Fund, PIMCO's Total Return Bond Fund. He just dumped all of his Treasuries from the portfolio at the beginning of this week. He feels like when the Fed stops buying them at the end of June the market will go soft (due to lack of buyers and the price of Treasuries will drop like a rock. At which time he'd probably buy them back on the cheap and when money tightens, the market starts to go to h***, people are going to run to safety and buy Treasuries like they did in 2008 and 2009. Bill didn't have one negative year in the fund in the last 10 years. He doesn't get it wrong too often. Think about what that Fund witnessed over the last 10 years and yet showed a return year after year. Lots of ugly.

Gary makes an excellent point. Stay positive. It helps. Work harder and smarter. Invest in educating yourself. It'll pay big dividends. And maybe, just maybe get a little p*ssed off. I find I'm very efficient when I'm upset. I can bang out the work. There's nothing wrong with being upset with the things we see. Change them where you can influence them. VOTE! America's politics are messed up. Need to clean house up there in D.C.  

Also, don't be afraid to switch gears if what your doing isn't paying the bills. Do what it takes. Team up with others if the load is too heavy on your own.

Incorporate your business to protect against liability in the event of the unexpected.

Need to lower peoples taxes so we can spend those dollars into the economy instead of spending them into a balck hole called the U.S. Government who insists on spending those dollars on countries that loathe us. I could go on and on but I'll stop. Time for some sleep. This got longer than I intended.

LOGDOG

One more thing .... let people know that their business is important to you and you appreciate it. Tell them that if there's a way you can do business with them don't hesitate to ask. It'll help create loyalty. I know I personally make spending decisions based on who does business with me and I tell them why they're getting my business.

DanG

Keep on keeping on.  Keep your life as near normal as you can, except for travel.  Stay at home as much as possible and make every trip count to the max.  Reduced consumption is what it will take to bring fuel prices back down.  While you're staying home, produce something you can sell directly to your neighbors for less than they would normally have to pay, while still making a little money for yourself.  Food is the obvious biggie here.  Even a modest sized garden can produce more than a family can eat and fresh produce is way, way overpriced in the supermarkets.  You could sell most stuff for half what they charge and still make money.  You could also barter some of it for some things you didn't plant.
"I don't feel like an old man.  I feel like a young man who has something wrong with him."  Dick Cavett
"Beat not thy sword into a plowshare, rather beat the sword of thine enemy into a plowshare."

Kansas

I really don't see a big return to consumer spending. A modest rise in it yes, but not a big one. Our population is aging. And older people simply don't spend as much. Most people in their 60s and 70s aren't going to build a new house. The one obvious exception is health care spending as a population ages.

I don't think we will have a double dip recession. And so much of what oil does is out of our control. Even if we had all the oil we needed, it will sell at market price that the world sets, not us. If we have a good way out of this, its more exports than anything. Our population may be getting older, but some countries are getting younger, or staying stable. And the standard of living is growing overseas. The other option is more immigration. That won't happen for at least as long as the unemployment rate is high. But that will change. And 30 year olds spend money, plus pay into SS and Medicare.

Ron Wenrich

When things hit the fan back in '08, I said there was going to be a paradigm shift.  That means that the way things were in the past are not going to be the way things are in the future.  People have changed their consumption habits and borrowing habits.  Frugal living will become the way to live for the next several years.  I don't see the consumer going deep into debt nor rely on increasing home prices to cover that debt.  Business won't be the same.

But, what I see is that the world no longer considers the US the center of the universe.  Unfortunately, the people in the US haven't changed that view.  The consumption of oil in the US is down 5% from 2007 levels.  Prices are up, because we no longer are driving the engine for more energy demand.  China is driving that, and they can afford to pay more.  India is also putting more people into the middle class and are demanding more energy.  Those 2 countries are not in recession.  They are driving the market more than the US.  Same goes for the precious metal markets and food.   Investment money is also pouring into the Orient.  There's better return on the investment there.

I don't know if we'll slip back into recession.  I think the economy is simply going to grind forward.   
Never under estimate the power of stupid people in large groups.

Cedarman

Being frugal always pays off.  I will raise prices as needed.  Being in a niche market allows me to set prices except when I am selling into a commodity market.  Business is brisk and to the point I am turning it away.  I am still in debt, about 1/3 of what it was 6 years ago and going down fast.  Our markets are very diversified, some like raised garden beds are hot. Others like cedar chests are not. 
Having a network of people that you can rely on and they on you will be very beneficial.  Having a budget and knowing where your money goes is the most important thing to have.  Without knowing what you spend money on, you have no way of deciding priorities.
I am in the pink when sawing cedar.

CX3

Heres what we have been doing to pinch a few pennies. 
We opened 2 new checking accounts, one for me, one for wife, and put 25 dollars a week in each. That is the only money we each get for eating out for lunch, sodas, etc.  Gas comes out of the main account.  You would not believe the money that adds up just because you are so much more careful because you only have 25 bucks to blow all week. 

We also try to keep the crew cab parked unless we just have to use it. 
We buy our vehicle insurances 6 months at a time now.  That saves about 600 a year. 

Simple things make a big difference sometimes.
I also recommend the Dave Ramsey Financial Peace seminar. We are taking it at church now its great. 
John 3:16
You Better Believe It!

Ron Wenrich

Just curious why you need a checking account.  I can do the same thing by putting $25 in my pocket, and when its gone, you can't spend anymore.  I use cash.  Its not a number in someone's book or screen.  It doesn't need to be swiped, and I know its immediately taken from my account. 
Never under estimate the power of stupid people in large groups.

Larry

My morning shopping trip today.

My little Ford tractor needs a water pump.  The Ford parts man priced me a New Holland pump for $170 but he recommended an aftermarket pump for $112 to save a bit of money.  Neither were in stock, but he could have either one here in a couple of days.  Add to that cost tax, fuel, and lost time to pick it up.

Quick check online and I found several at the $100 mark and one at $79.  I called that dealer and negotiated the price to $64 because I also found somebody selling them on eBay for that price.  Shipping cost was $12.

I sprung for the cheap one and saved a few dollars.  Took about an hour to comparison shop.

I've been thinking too much.  I figure my vote don't make any difference in a national election with a few million other votes.  About the same in a state election.  In local elections my vote and my voice may make a big difference.  So...I'm supporting any and all school bond elections and keeping a close eye on the school board.  I hope if we get all these kids educated they stay off the dole, and do a better job managing the country than my generation has done.  Need some really smart people to take care of me when or if I get old. ;D
Larry, making useful and beautiful things out of the most environmental friendly material on the planet.

We need to insure our customers understand the importance of our craft.

Tom

But your Federal vote does count, Larry.   If yours doesn't, whose does?   We need to hang onto any little piece of the string we can grab a hold. :)

CX3

Quote from: Ron Wenrich on March 14, 2011, 05:59:50 PM
Just curious why you need a checking account.  I can do the same thing by putting $25 in my pocket, 

I understand your point.  We just like the idea of every monday it automatically gets put in there, I dont have to hassle with cashing a check or going to the bank.  And I like the idea of a debit card, even though a guy cant see the money dwindling away like you can with a wallet full of cash.  And we also like to look online and we can "see" where we spent that money.  It makes you think twice about going back to mcdonalds when you see youve already been there 5 times that week!
John 3:16
You Better Believe It!

SwampDonkey

I keep very little cash in my wallet, it stays right in the bank until I use my card, which has no fees whatsoever on Interact transactions, cheque writing, or taking out cash at their machine. I also pay no fees for an account. Every week a set amount transfers from chequing into my savings, plus I often transfer extra on top of it.
"No amount of belief makes something a fact." James Randi

1 Thessalonians 5:21

2020 Polaris Ranger 570 to forward firewood, Husqvarna 555 XT Pro, Stihl FS560 clearing saw and continuously thinning my ground, on the side. Grow them trees. (((o)))

Brucer

A couple of years ago I got to talking with a friend. She commented on her fears about the economy, fuel prices, and climate change. Then she said, "I guess you think I'm over-reacting a bit". I told her I thought she was under-reacting if anything. And that little conversation had some interesting results.

She ran for city council and got elected. Then she began working with volunteers to figure out how to capture the knowledge from some of us "more experienced" folks and pass it on to a younger generation.

There is now a community garden for those people who don't have space of their own to cultivate. I was happy to contribute slabs, off-spec lumber, etc.

Last year they had a series of garden tours of the more successful gardens in the area -- we host one of those. It may not sound like a big deal to you folks in the sunbelt, but growing season is pretty short up here. (This has been a mild winter, so today after 4 days of rain there is only 2-1/2 feet of snow on my woodshed roof.) A lot of the younger people figure you just can't grow vegetables here. They kinda got their eyes opened last year.

This year there's been a series of discussions put on by local people that grew up pretty much living on their own resources. That's been an eye-opener for many young people, too.

Just recently we had a workshop on making houses for solitary bees. (Materials contributed by yours truly). You can really see the difference in things like strawberries when there are a lot of pollinators around.

Barbs a master knitter and she's been running knitting classes at the local yarn shop. Her friend Trish teaches soap-making through the recreation department.

The interesting thing is how it has brought our natural sense of community to a whole new level.
Bruce    LT40HDG28 bandsaw
"Complex problems have simple, easy to understand wrong answers."

Ron Wenrich

There are other ways to expand your horizons if you're doing community gardening.  One is SPIN farming.  That's some really intensive farming on small acreage.  You should be able to do short growing season crops at the community level.  http://spinfarming.com/

You can extend your growing season by the use of greenhouse or tube structures.  I'm thinking of doing that here.

The other is container gardening.  Instead of a big garden, you just grow small amounts of crops in containers in your backyard. 
Never under estimate the power of stupid people in large groups.

SwampDonkey

Not too many places in the country you can't grow a garden, some places need a little protection from frost or raised beds if it's wet climate, but you can grow stuff. ;D
"No amount of belief makes something a fact." James Randi

1 Thessalonians 5:21

2020 Polaris Ranger 570 to forward firewood, Husqvarna 555 XT Pro, Stihl FS560 clearing saw and continuously thinning my ground, on the side. Grow them trees. (((o)))

underdog

Direct deposit and Debit cards have been great for us in many ways.
Add to that the power of the web to find the best deal for you and have it delivered to your door.
I rarely even go to town anymore. I load of fuel in my truck lasts for months ;D

Looks like the powers that be are out to put a stop to that.

> Illinois Governor Pat Quinn signed into law the "Mainstreet Fairness Bill"
http://www.americanthinker.com/blog/...ois_affil.html

> Debit card interchange fees and the federal government.
http://www.redstate.com/erick/2011/0...arm-consumers/
Seems the big box stores are just exstatic about it.


Patty

The links in the post above did not work for me.

When Illinois passed the Fairness Bill, it meant that Amazon would have to charge sales tax on items sold through it's Illinois entities. Amazon reacted exactly the way they said they would react................they closed all their Illinois entities.

So that bill actually hurt the state more than helped, in my opinion. What a surprise.
Women are Angels.
And when someone breaks our wings....
We simply continue to fly ........
on a broomstick.....
We are flexible like that.

Ron Wenrich

Our state is going to put a new line on our income tax forms.  Its to remit all the sales tax that you were supposed to pay, but you didn't because you bought out of state or on line.  They figure they'll get $340 million.  I figure most people will say $0.
Never under estimate the power of stupid people in large groups.

SwampDonkey

The feds get their cut here in Canada, the 5% GST is on all purchases no matter where your at in the country. The Province put the tax on at the border crossings (13%) some years ago, so your paying the state side tax, then hit by the tax man when you come home with purchases. I never figured it was fair to tax that way. When your in another state or province, you pay their tax because your using their infrastructure not your home province or state.
"No amount of belief makes something a fact." James Randi

1 Thessalonians 5:21

2020 Polaris Ranger 570 to forward firewood, Husqvarna 555 XT Pro, Stihl FS560 clearing saw and continuously thinning my ground, on the side. Grow them trees. (((o)))

pigman

Ron, our state tax forms have had that line for several years. So far, I have never found anyone that has put anything but 0 on that line. I am sure there are some that  have put down a number, it's just I haven't found them yet.
Of course I report all my out of state purchases for sales tax purposes. ;)
Things turn out best for people who make the best of how things turn out.

Busy Beaver Lumber

Unfortunately, for the masses, nothing will change or get better for them because they hold on to the old, outdated models of how wealth is built.

The way you are taught in school is to work hard, and put your money in the bank to get interest and watch your saving grow. What a vessel of dung ::)

How many people do you know that got rich accepting a 2% to 3% rate of return on their money, only to have to give about one third of that to the federal and state government at tax time, thus further lowering your actual rate of return.

In accounting, there is what is know as the "rule of 70". Simply stated, if you want to know how long it will take you to double your money at a given interest rate, take the number 70 and divide it by the interest rate to get a rough estimate in years as to how long it will take to double your money

For example if the interest rate is 2% and you want to know how long it would take 1 dollar to double to 2 dollars, take 70/2 = 35 years. Thats right, at 2% interest it takes almost 35 years to double your money.

So what then is the alternative?

Investing   ::) as opposed to saving :'(

If you want to build wealth, you need to actively seek out opportunities that allow you to earn a higher rate of return on the capital you have to invest. Here are just a few examples of investing as opposed to saving:

Investing:
1. Buying and selling Stocks - With a modest amount of research and using the avilable on-line tools, even a novice can quickly learn how to pick stocks that do better than a 2% return. With some practice, double digit return are definately achievable

2. Buying and reselling Merchandise of any kind - Every day I scour ebay and craigslist in search of items that can be bought and resold at a profit. I do the same at auctions, garage sales, and flea markets. The potential here is huge. I have bought coins for as little as 30 cents a piece and had them sell on ebay for well over $100 a piece. I recently bought a 1913S type 2 buffalo nickel at an estate sale for 50 cents and sold it for $325 two days later. These are not 2% returns on an investment but rather returns in the thousands percentage range and these returns are earned in a matter of days as opposed to an entire year. And yes, I do practice what I preach. At the current time i have of 450 coins for sale on ebay and there is not a single one listed that will not at least tripple the investment I have into it and many will give me a return of between 300 to 1000%. Over the years I have bought and sold everything from tools to jewelry and everything in between.

It is not as hard as many make it seam and can be done at many different levels. You can start buying and selling at whatever level you can afford, then roll those profits into more buying and selling activities. Even if you start doing it with $50 a month, before you know it, you are soon dealing in thousands of dollars a month worth of transactions and very health returns as opposed to the bank rates

3. Invest in Capital Equipment - It is not hard at all to find a piece of equipment that can earn you a better return than putting that same money in the bank. Lets say you had two choices (1) put $3000 in the bank or (2) use $3000 to buy an LT-10 sawmill. If you put the $3000 in the bank, at the end of the year, at a whopping 2% return, you will have roughly $3006 dollars, of which you will give about $2 to uncle sam. On the other hand, lets say you buy the mill. It would take you all of 10 minutes to cut a walnut board that would earn you say 30 cents a board foot and equal the same return you get by letting the bank use your money all year. The beauty of this is you have the other 364.9 days of the year left to keep making money with the same $3000 investment in the mill and you retain that capability for ever. This is how wealth is built and this is the difference between investing and saving.

It is also how you make it through a recession with easy and not have to switch from eating steaks to eating macaroni and cheese.


Woodmizer LT-10 10hp
Epilog Mini 18 Laser Engraver with rotary axis
Digital Wood Carver CNC Machine
6 x 10 dump trailer
Grizzly 15in Spiral Cut Surface Planer
Grizzly 6in Spiral Cut Joiner
Twister Firewood Bundler
Jet 10-20 Drum Sander
Jet Bandsaw



Save a tree...eat a beaver!

Ron Wenrich

Buying and selling = speculation.  Buy low and sell high.  Buying with the expectation that prices will go higher.  Its a good way to wealth.  Although, in stocks, you can buy with an expectation of a return in dividends and hold for a longer time period.  That is more like investing vs speculation.  Most stocks are sold on speculation than on return. 

Capital investing is where you expect to get a return on the use of the capital.  But, you also have to have other capital investments and labor to go with it.  Your walnut log wasn't free, nor was your time.  The difference in return is that of risk.  The higher the risk, the greater the return.  You just need more winners than losers. 

But, another good way is to spend less than you take in.  Too many people have gone into debt way over their heads and when the income stream is reduced, they still have obligations.  They also buy things that they don't really need.  All those do-dads and gadgets usually come with a monthly package of some sort that needs to be paid. 
Never under estimate the power of stupid people in large groups.

SwampDonkey

I've seen people that couldn't afford it, get a phone with all the add on packages you could get. When asked why, the usual answer is "it's the one thing in life I feel I am entitled to." Kinda like having a roof over your head. :D

Personally I just about to the point of pulling internet, it's gone up in January again for Dial-up, by $4 bucks. It's now $33 to have basic internet in this province. First signed up it was $14. Company got acquired 2 times since being a crown corporation and price has more than doubled. I think Canada has become the most expensive place to use internet. I bet it's a lot less in Egypt and broadband to boot.  ::)
"No amount of belief makes something a fact." James Randi

1 Thessalonians 5:21

2020 Polaris Ranger 570 to forward firewood, Husqvarna 555 XT Pro, Stihl FS560 clearing saw and continuously thinning my ground, on the side. Grow them trees. (((o)))

scsmith42

My thanks to all for sharing their ideas in response to my original posting - both about ways to conserve precious funds  as well as more wide ranging thoughts regarding the trends and dynamics of the economy and how best to prosper.

One thing that I haven't seen mentioned yet is the importance of having the attitude that one will persevere and prosper.  On a daily basis we get bombarded with so many negatives - the price of fuel and food rising, significant unemployment, reduced business, worldwide tragedies, etc.  To me, surviving hard times requires more discipline and focus than that which is required to survive good times.

It seems to me that the foundation for surviving hard times is attitude.  An Attitude that says "I will not quit; I will never accept defeat".  An attitude that states "If you knock me down, I'll get up again and keep on trying until I prevail".  An attitude that states "I'll never quit looking for opportunities or ideas to help me survive hard times and even prosper through them.
Peterson 10" WPF with 65' of track
Smith - Gallagher dedicated slabber
Tom's 3638D Baker band mill
and a mix of log handling heavy equipment.

Ironwood

Check out Charles Swindoll, "attitude" I have this quote only second to the Wayne Dyer one at the bottom of my postings

Ironwood

Attitude
by Charles Swindoll [wikipedia.org]
The longer I live, the more I realize the impact of attitude on life.

Attitude, to me, is more important than facts. It is more important than the past, than education, than money, than circumstances, than failures, than successes, than what other people think or say or do. It is more important than appearance, giftedness, or skill. It will make or break a company ... a church ... a home.

The remarkable thing is we have a choice every day regarding the attitude we will embrace for that day. We cannot change our past. We cannot change the fact that people will act in a certain way. We cannot change the inevitable.

The only thing we can do is play on the one string we have, and that is our attitude ... I am convinced that life is 10% what happens to me, and 90% how I react to it. And so it is with you ... we are in charge of our Attitudes
There is no scarcity of opportunity to make a living at what you love to do, there is only scarcity of resolve to make it happen.- Wayne Dyer

Ironwood

BusyBeaver,

You hit the nail on the head. We had a insurance guy here once (we need it for the young ones if we pass), he was giving me the "pitch" and aid how one CFO was fully invested in the idea of investing thru the insurance company for a fixed return.  ::) Just 'cause one CFO is stupid doesnt mean I need to be!

  I invest here, in things where my expertise is. We have a few "unconventional" investments, like the "Iron Bank". The Bank is the largest true wrought iron pile in North America (that we and blacksmith trade know of). We are the offical supplier to Colonial Williamsburg, and Mount Vernon. Quality and consistancy is key, and ours has both. This has been an outstanding investment. Outside of one supplier in Yorkshire England who is repuddling historic iron we are the best gig around, AND we're on this side of the Pond.

I bring a "non traditional" approach and my wife brings alot of more traditional approach, for us it has been a wonderful balance. I do need to be careful, as I see opportunity in most anything.  :D


Ron,

Pa has had the "USE TAX" line on our sales tax forms for years, and it is such a grey area that is a bit un-nerving. I have been know to call a few State Sales tax folks for clarity on issues. It reminds me of the mis-understood, randomly enforced DOT regs. Dont even get me started.  >:(
Ironwood
There is no scarcity of opportunity to make a living at what you love to do, there is only scarcity of resolve to make it happen.- Wayne Dyer

DanG

I made a move yesterday toward preservation of the personal coffers, and reduction of our energy "footprint."  Our minivan crapped out several months ago.  It is repairable, but at an expense I can't afford right now.  We have been forced to rely on the one-wheel drive, 12mpg Dodge truck.  Yesterday I got a call from a buddy who knew of a deal on an economical car.  I ended up paying $600 for a '93 Toyota van that allegedly gets 28mpg.  It has lots of miles on it but runs well.  Tires are practically new.  It doesn't look all that bad, except that it started out ugly. ::) :D  I figure it will pay for itself in fuel savings alone in about 3 months.
"I don't feel like an old man.  I feel like a young man who has something wrong with him."  Dick Cavett
"Beat not thy sword into a plowshare, rather beat the sword of thine enemy into a plowshare."

SwampDonkey

Dang, I went out to the Piggy Roast and back last year for $400 including two hotel stays in Ottawa. Oh, and you might recall it was a Toyota RAV4. ;) Picked up a free saw, so the trip was free. :D ;)
"No amount of belief makes something a fact." James Randi

1 Thessalonians 5:21

2020 Polaris Ranger 570 to forward firewood, Husqvarna 555 XT Pro, Stihl FS560 clearing saw and continuously thinning my ground, on the side. Grow them trees. (((o)))

Larry

Some thirty or forty years ago we couldn't afford a clothes dryer.  I welded up some galvanized pipe, and put up some old galvanized phone wire for a clothes line.  As our prosperity improved over the years, we could afford a dryer but Kathy still used the clothes line at times.  We made several moves and each time over my objections, Kathy had me dig up the clothes line poles and move them also.

Today I planted them in Arkansas and hope this is there final resting place.  With the concrete I used over the years they must weigh a 1,000 pounds.  We can easily afford a dryer now...just can't afford the lectricity to run it.  We got a good spring fed crick to and a washboard.....



I betcha all those folks in those gated subdivisions have clothes lines...that's why they have the gates, so nobody can see there laundry. ;D
Larry, making useful and beautiful things out of the most environmental friendly material on the planet.

We need to insure our customers understand the importance of our craft.

Tom

Naw they don't either  :D

You can't help but love a gal that will use a clothesline.  I don't care what the salesmen say, sheets and underwear just feel cleaner after they've spent a day in the sun.

DanG

You got that right Tom!  We ain't had a dryer in 15 years now, and don't miss it at all.  Not only do sheets and underwear feel better, but towels dry better too!
"I don't feel like an old man.  I feel like a young man who has something wrong with him."  Dick Cavett
"Beat not thy sword into a plowshare, rather beat the sword of thine enemy into a plowshare."

red oaks lumber

we tried it once almost broke my nose with the towel, after reading the directions that came with the c.line it says warning this product must be used at above 32 deg. serious injury or death can accurr...
love havin cloths on the line
the experts think i do things wrong
over 18 million b.f. processed and 7341 happy customers i disagree

tyb525

Fred, your entire post is something that should be taught in school, and it's exactly how I feel. I did play video games when I was younger, however the games I played were various "Tycoon" games (railroad, airport, mall, etc.), and from them I got a basic understanding of investing. I've dabbled in investments and reselling on ebay, and whilst I haven't made a fortune yet, I have made a profit.

Anyways, that is some great info that more people need to hear.
LT10G10, Stihl 038 Magnum, many woodworking tools. Currently a farm service applicator, trying to find time to saw!

Ironwood

Never thought about it much, my wifey loves the clothes line and hates the A/C unless it is brutal HOT. Our washer and dryer were bought used from her Maid of Honor's Mom fer $100 for the set and have lasted 15 years (so far), our refigerator was from my uncle as a wedding gift. He works at a BIG furniture store in Ohio and got it used from someone who wanted something new and fancy, been aaaaa 15 years still going. Cherry kitchen cabinets from a non-profit in Pittsburgh Construction Junction.   We joke ALOT about our savvy ways. Just this morning taking the kids to daycare and school, the neighbor had put out a completely fine Mongoose fully suspended mountian bike w/ a note "please take for trash" I was *pithed. I told my eight year old at least it could have went to Goodwill, or at least put it "curbside" with a free sign on it a few days before trach pickup.  ::) This country is really headed the wrong direction with all this MASS CONSUMERISM. It is NUTS.  :-X :-X :-X We have some painted signs that go down to the street with stuff we dont want that is still usable, it says "FREE". how difficult is that. Really gets my IRE up. LAZY, WASTEFUL Americans.  :-\

Ironwood
There is no scarcity of opportunity to make a living at what you love to do, there is only scarcity of resolve to make it happen.- Wayne Dyer

AvT

Wannabe sawyer, Cord King M1820 firewood processor Palax KS35 Ergo firewood Processor, 5403 John Deere, Bunch of other farm equipment,   LT70 Remote Woodmizer.  All good things but the best things in life are free.. If you don't believe me.. hold your breath for 2 minutes

Busy Beaver Lumber

Quote from: AvT on March 23, 2011, 11:44:11 PM
Our credit culture is killing us...

No mortgage
No car payments
Never charge anyting I can not pay in full each month
Pay with cash as much as possible

Best way I can think of to avoid any possible financial problems and sleep real well every night. It is also how you get through a recession without feeling much pain while others are crying the blues and going belly up left and right of you. If you don't have it, don't even consider spending it.

If I want a new piece of equipment I work hard and save up for it rather than run out and buy it immediately and pay interest at a rate of many times more than the bank gives me for using the money I have on deposit with them.
Woodmizer LT-10 10hp
Epilog Mini 18 Laser Engraver with rotary axis
Digital Wood Carver CNC Machine
6 x 10 dump trailer
Grizzly 15in Spiral Cut Surface Planer
Grizzly 6in Spiral Cut Joiner
Twister Firewood Bundler
Jet 10-20 Drum Sander
Jet Bandsaw



Save a tree...eat a beaver!

AvT

good job BBL

That philosophy works for me as well.  I think there are quite a few members in this forum that have the same values.
Wannabe sawyer, Cord King M1820 firewood processor Palax KS35 Ergo firewood Processor, 5403 John Deere, Bunch of other farm equipment,   LT70 Remote Woodmizer.  All good things but the best things in life are free.. If you don't believe me.. hold your breath for 2 minutes

Cedarman

Some machines are so expensive that you cannot save up for them. We are looking at a $500,000.00 grinder.  But the machine can generate income at the rate of $1500 per hour.  For us the determining thing is how many hours of grinding can we do in a year. Is there enough market for the material to justify the expense.  We would have to borrow money to finance this expansion of our business.

I look at borrowing for a business purpose as ok.  Borrowing for personal use as an absolute nono. (Not that I have not done so in the past, but never again) Is a house a personal expense?

I tend to agree with the above posts, but I have a "but" in there.
I am in the pink when sawing cedar.

Kansas

That grinder is an investment. The interest on the loan is an expense. In the sawmill business, unless you were born wealthy, if you plan on major equipment purchases, you have no choice. Once heard something said by a college professor associated with the wood industry. What he said made a lot of sense. You borrow for your capital expenditures. You save your cash for inventory, fixed and operating expenses. Sure, borrowing money is a risk. So is getting up in the morning.

red oaks lumber

borrowing money is not a bad thing for buisness. if aperson won't borrow money for their business then they really don't have confidence that their business will succesd. new equipment haelps with depreciation,and other tax deductions.
l
the experts think i do things wrong
over 18 million b.f. processed and 7341 happy customers i disagree

Ironwood

There is no scarcity of opportunity to make a living at what you love to do, there is only scarcity of resolve to make it happen.- Wayne Dyer

SwampDonkey

Yes, when you borrow to invest in your business you can get tax credits for 1) consumptive tax to buy it, 2) annual capital cost allowance credit as it depreciates (usually 30%), 3)credit on the interest accrued annually to make the purchase.   8)
"No amount of belief makes something a fact." James Randi

1 Thessalonians 5:21

2020 Polaris Ranger 570 to forward firewood, Husqvarna 555 XT Pro, Stihl FS560 clearing saw and continuously thinning my ground, on the side. Grow them trees. (((o)))

AvT

I also agree with the concept of borrowing for business.  I used to borrow up to half the cost of a machine for business purposes.  That way it was easy to make the payments and left some room for surprises or economic downturns and there were many surprises and downturns in the business I was in.  For me a house was a personal expense that didn't justify borrowing.  My first house was a dumpy trailer I bought for 13,000 cash that we lived in for 8 years.  It took me that long to save up 100G to build a decent house.  Of course a decent shop came first.  Maybe that is why my ex dumped me as soon as the house was done.  She was a good "housekeeper".  I didn't have enough cash after that to buy another house so I did have to borrow about 30% of the required funds for the next house and paid it off in five years.  Mom carried the mortgage.... she wanted to move to town anyway so it worked out quite well.  The house needed many major repairs but managed to get it done with cash.
Wannabe sawyer, Cord King M1820 firewood processor Palax KS35 Ergo firewood Processor, 5403 John Deere, Bunch of other farm equipment,   LT70 Remote Woodmizer.  All good things but the best things in life are free.. If you don't believe me.. hold your breath for 2 minutes

northwoods1

" How can we mitigate the potential for a double dip recession? "

It is interesting to read all of what the members here have been saying, as always.

But my honest opinion is that we can not do anything to prevent the economic hardship that is very most likely coming. And NO, I do not consider myself to be a pessimist, or an optimist really, I  just try to be realistic. If you look at what had happened since WWII and the U.S. coming off the gold standard, it has allowed the government to just simply keep printing new currency in an attempt to stimulate the economy. This works... along with monitoring, raising and lowering interest rates so people can continue to borrow... I am afraid this is not a solution, this tactic has just allowed us to grow to the point where we are now. It can't continue forever though... look at the rest of the world... that is the standard by which we need to judge our own situation.

I laugh at the idea that we have it hard now and that economic times are tough. Hope for the best but prepare for the worst that is what I have decided to do.

We here in the United States have had a wonderful existence for quite a while now and it is primarily because we have been allowed to grow and thrive which has been mostly a result of the fact that we had a new continent to exploit and settle.

And then WWII happened... Europe was decimated... allowing us and the U.S. $$$ to take over the world. Now the dollar is weakening...

I would look at the changes that are coming as not being a "double dip recession" but it is going to be economic reality hitting us full force. No more trade deficits for the U.S. , we will have to begin building up our manufacturing base here once again.  the one that has been destroyed in the last few decades by companies like Walmart who are in it just to make a $$ for themselves but seem to not mind at all the fact that they are destroying the fabric of this country so they can benefit from it themselves. They are benefiting as is China... The Chinese are COMMUNIST. I would rather be poor... then have to follow that example... poor and FREE of that kind of governmental control.  Double dip recession? yah, uh huh, it will and HAS to happen. For the long term stability and economic independence of the country it has to happen. The kind of economic growth that this country has experienced in the last century can not continue forever. The U.S. government can not just simply keep printing new money which is what it has been doing since we came of the gold standard.
Americans will have to work harder and get by with a lower standard of living. The good thing is we are capable of that! And even better, it does not mean we can not be happier as a society and feel positive about the future. To the contrary in fact I believe. The tougher times are... the more people there are able to rise to the challenge and show the better qualities of human nature. The ability to adapt to the changing world situation is that will carry us through.

Go outside on a clear night and look up at the stars. Does it make you feel insignificant? Goood!


Busy Beaver Lumber

cedarman

Perhaps I should clarify my statement about not borrowing money to start or grow the business and instead finance it from earnings.

In the example you give of spending 500K on a shredder, in your situation I can certainly see why you would opt to do so. I have been to your website, read your posts, and even talked to you on the phone. You are well established in this industry with two locations, plenty of customers, and with a very well defined and developed niche market for cedar. You sell both domestic and internationally in weekly volumes that others do not achieve in an entire year.

Your investment in a piece of equipment like that shredder, even if you had to finance it, would appear to be a wise one given the volume of mulch you sell and a well established customer base, plus the fact that people prefer cedar mulch above all the other alternatives. Couple that with the fact that you know the cedar business and market better than anyone else and have a good track record of strong income, and it would appear to be a very logical move on your part.

My comment is more aimed at the part time or newby sawyers, or for that matter anyone that is contemplating starting a new business or attempting to make a small one grow in these uncertain economic times. I do not believe it is wise to mortgage your house to start a business. If the business fails you loose it and your house. I am always worried when I see people do this and unfortunately know quite a few people that wound up in bankruptcy doing just that when the business of their dreams failed and became their worst nightmare instead.

Reading the posts on this forum, I read a lot of them where people lost a job or were down on their luck and thought they would get into sawing because they thought they would make a fortune in it. Most of them have very little, if any sort of a viable business plan in mind. They don't know where to get logs or who to sell the lumber to and have even less of a clue about what expenses come along with running a business. As many can tell them, this business is just not that easy to make a profit in, never mind one large enough to replace a full time job unless you really know what you are doing and have thought it through. And the margins can be slim. There are people that post on here that they did over $370,000 in business one year and then they can not afford to buy enough logs to keep them going the next year.

I would say to anyone thinking about getting into this business, think of the sawmill business like going to the casino and never gamble with money you cant afford to lose just in case things don't go the way you thought they would. If on the other hand you do well, you will feel like you hit a jackpot on a slot machine and walk away happy.
Woodmizer LT-10 10hp
Epilog Mini 18 Laser Engraver with rotary axis
Digital Wood Carver CNC Machine
6 x 10 dump trailer
Grizzly 15in Spiral Cut Surface Planer
Grizzly 6in Spiral Cut Joiner
Twister Firewood Bundler
Jet 10-20 Drum Sander
Jet Bandsaw



Save a tree...eat a beaver!

red oaks lumber

heres the other take on borrowing money. if you take your cash and start a business(sawing) buying a new mill and some other stuff($40,000)  maybe a year later things aren't really panning out, ok your losing your mule.  with the poor economy equipment isn't selling for nearly what you have invested maybe you sell it all for $25,000 youv'e lost $15,000 of your own cash. had you borrowed the money you would stillhave cash reaserves to float the business along till better times and worst case  let the stuff go back to the bank and you still have your cash.
the experts think i do things wrong
over 18 million b.f. processed and 7341 happy customers i disagree

LOGDOG

Are any of you paying attention to the Debt Ceiling for the USA right now? Take a look at the links below. Steer clear of bonds for a while.

http://www.usdebtclock.org

http://money.cnn.com/2011/04/04/news/economy/debt_ceiling_deadline/index.htm

http://money.cnn.com/2011/03/31/news/economy/debt_ceiling_debate/index.htm?iid=EL

...and although it's dire, you need to take an hour or so and listen to this video:

www.endofamerica14.com

....if it wasn't full of so many facts I would discount it entirely but we can't ignore what we're actually seeing.

Lucas P

Hello,
I work for a company that manufactures forestry equipment and we are trying to better understand our customers. One question that arose while I was reading this forum was "how long does it take to get paid by the mill after you deliver the wood?" If you guys/girls could answer that I would really appreciate.
I personally believe in savings is prosperity. Spending money to generate jobs is nothing but waste. If we save money instead of spend, we could once again be creditors of the world instead of debtors.
Thanks,
Lucas P

Cedarman

We pay on Friday for all wood brought in through Thursday.
I am in the pink when sawing cedar.

LOGDOG

Ironically "increased savings" is a bearish indicator and a signal to most economists of an economic slowdown. It indicates fear. People stop spending because they're worried about tomorrow. When they stop spending that means that businesses see a decline in overall sales which means fewer good and services are being sold which means the companies behind them won't have the same amount of profits they would have if people were spending. Stocks are profit driven. So are dividends. So in the absence of profits in publicly traded companies there's nothing to attract investors to invest in those stocks. Where there's no demand for a stock the price falls. If you have a retirement plan and stock prices are falling that's not good.

I know what you're saying. One would think that saving and being fiscally responsible would be good. Ironically, if we all saved more than we spent, the United States stock market would tank. It's built on a weak dollar. If you have any doubt about this fact, chart the dollar swings against market inclines and declines. It speaks for itself. Increased savings and a reduced amount of debt would most certainly strengthen the dollar. Unfortunately, that would be bittersweet. One other negative effect of a strong dollar is that it negatively impacts our ability to export goods. When our dollar is strong, it usually means that the other countries currency has weakened. This means they can't buy as much of our goods as they could before when the dollar was weak.

It's a tangled web. On an individual basis, I can't blame anyone for saying "to heck with all that I'm saving my money". But the above are some of the factors to consider regarding increased savings.

Lucas ... you may want to start a dedicated thread asking about when and how people are paid in the Sawmill topics or the General topics or even the Business Management thread. It might get more exposure. Welcome to the Forum.

Brucer

Quote from: Lucas P on May 17, 2011, 03:56:35 PM
... One question that arose while I was reading this forum was "how long does it take to get paid by the mill after you deliver the wood?" ...

I put the cheque in the mail the morning after I receive the invoice.
Bruce    LT40HDG28 bandsaw
"Complex problems have simple, easy to understand wrong answers."

Kansas

If its a logger I trust, they can get paid when they deliver, or in some cases, after they have it logged out and ready to pick up. The reason I say loggers I trust is that I'm terrible about getting logs measured up. The loggers tend to  measure a few less board foot than I would have. (I'm not saying I haven't occasionally spot checked their measuring). Someone else delivering I measure and pay right there, unless its walnut. I have a walnut buyer come through once every week or two to do that.

Handy Andy

   IMHO, think you guys should be careful about borrowing, as this low interest policy can not last.  The govment borrowing all the money available in the world, plus all they can print can not last.  If the fed was honest, rates would be 30%. So things will change, and banks have a nasty habit of upping your rates.  Happened in the 80's, and hurt a lot of guys when rates hit 19%, and this time it could be worse.  Yesterday I heard the feds are going to spend the federal employees retirement fund.  They've already spent about everything else.  What happens next?
My name's Jim, I like wood.

SwampDonkey

If that's the case, how long will it take to use the politicians pensions?  ::)
"No amount of belief makes something a fact." James Randi

1 Thessalonians 5:21

2020 Polaris Ranger 570 to forward firewood, Husqvarna 555 XT Pro, Stihl FS560 clearing saw and continuously thinning my ground, on the side. Grow them trees. (((o)))

LOGDOG

I think Tim Geithner said he can run things until August 2nd by dipping into the pension fund. But by then they need to have the debt ceiling raised otherwise the defaults will start. What's borrowed from the pension fund has to be made whole again ....with borrowed money of course.  ::)

As to borrowing now .... well, it's a good time, and has been a good time to re-finance debt at substantially lower rates than a person may have had coming into this period. If you have to borrow, just make sure the rate is fixed and not variable because Andy is right, rates have one way to go and that's up.... although I don't see it happening to any large degree anytime in the next 2 years. Especially with the election coming. That would mean death to the economy at this point still.

red oaks lumber

if i made enough money to save for 150-$200,000 equipment purchases. i would work till i had saved 1/2 mil then i would sell every thing and retire. seems to be a better plan than continuing to work. :D
the experts think i do things wrong
over 18 million b.f. processed and 7341 happy customers i disagree

SwampDonkey

Better head to Peru or Costa Rica, because the half Mill won't last you long. It costs you every day to live unless your up in the mountains heating with wood you cut by buck saw to eat deer meat you got by arrow and wild roots you dug by hand and use whale oil in the lamp. ;)
"No amount of belief makes something a fact." James Randi

1 Thessalonians 5:21

2020 Polaris Ranger 570 to forward firewood, Husqvarna 555 XT Pro, Stihl FS560 clearing saw and continuously thinning my ground, on the side. Grow them trees. (((o)))

LOGDOG

Yep. I used to think that $500K was a lot of money. Then I became a Financial Planner. When a person starts looking at how much income $500K spins off at guaranteed fixed rates, it's not much. 3% = $15,000.00/yr. 4% = $20,000.00 etc. This is why a low interest rate environment like we're in actually hurts a lot of retirees. They see a substantial drop in income because a lot of them invest in cd's. Fixed annuities are slightly higher. Granted, many of them may have one or two SSI checks coming each month and perhaps a pension "maybe". But when all that doesn't cover it and you start to go into the principal of your nest egg, that means next year your nest egg doesn't have the same earning potential because now maybe you only have $490K instead of $500K.

At our age though, it's true ... we can take $500K and invest it in logs, or land, or rental property, etc. and perhaps do better than the fixed rates mentioned above. The luxury we have is time. If we mess up and lose it all, we have time to go back to work and build up our stash again. Once you hit retirement age though, you start steering clear of risk because you just don't have the same amount of time to recover from a downturn.

red oaks lumber

your standard of living must be real high if 1/2 mil won't go very far! if your stuff is paid for your cost of living should be fairly low
far as my earlier statment about 1/2 mil to retire it was for conversation purposes only.
your example of investing your 1/2 mil and living on the interset only my question is why only live on the interst? isn't the whole idea of having a retirement is to live on that money not just the interest?   
the experts think i do things wrong
over 18 million b.f. processed and 7341 happy customers i disagree

Sprucegum

If you are going to live on that money you better predict pretty acurately how long you are going to live.

LOGDOG

I understand it was for conversational purposes only r.o.l. ....

Here's the thing, during retirement, people's savings becomes their "business" if you will. They're dependent on whatever their savings will earn to complement their Social Security Income, Pensions, etc. ....Now actually living off the money is something that we refer to as annuitizing the money. That's where you use both principal and interest each year, and each year you erode the overall pool of money until at some point you have none left. This would be fine, if you knew "when" you were going to die as Sprucegum points out. Most of us don't know when that'll be.

As far as standard of living goes ... you have to remember that for most people their needs change as they enter their retirement years. They may have to pay for a Medicare Supplement policy, maybe Long Term Care Insurance in the event that they need nursing home,assisted living, or home health care for an extended period of time. They may have life insurance premiums to pay. They still have property taxes to pay. They still probably pay something in the way of income taxes. They still have insurance premiums to pay on their home and belongings. Food, clothing, maintenance on home. Etc, etc... Just because you retire, it doesn't mean the world stops and now you don't have these expenses. Actually, you probably have near the same expenses, short of debt that you may have had when you were younger, but everything else continues and then some usually (plus add inflation), but now you don't get up and go to work everyday to get a paycheck each week. You're dependent on what you've saved and whatever streams of retirement income you've accumulated along the way. Throw this in the mix ... husband and wife are 65, one needs to go into the nursing home unexpectedly for an extended period of 5 or 6 years at $4000.00/month to say $6000.00/month and they don't have insurance for it. Now that money, in addition to everything else is coming out of the couples nest egg. That's an additional $48,000.00 to $72,000.00 a year. That would eat away at $500,000.00 super quick. The other part of the equation is that often times, when one spouse dies, the other doesn't get to keep collecting both retirement checks. Social Security is that way. Most women end up dropping their check when their husband dies and taking over their husbands, "usually" because it's higher than theirs. If you're the husband in this case, then you lose your wife's SSI check. Also some pensions don't have Survivor payout options or if they do, many people don't elect them because they stand to get a higher payout while they're alive vs. a smaller payout while alive with say 50% of the smaller payout continuing on to their spouse when they die.

It's good to think about these things when you're our age and then plan for them. We've got our Life Insurance bought already and our Long Term Care insurance bought already because we don't have children. This hopefully will prevent some of the unforeseen occurrences from eating into our nest egg. If only we had a crystal ball right?

SwampDonkey

Quote from: red oaks lumber on May 19, 2011, 01:18:15 PM
if your stuff is paid for your cost of living should be fairly low

Stuff's never paid for, cars wear out, you need to heat the house, repairs to the house, fix this fix that, taxes, insurances, most folks have to buy food, even if it's home raised it all costs, service fees for this or that. I figured it out once for here, I'd need a minimum of $1200 to live if you make a car payment and own your land and buildings outright. And if you want something extra or have an emergency where cash is needed for a repair, add that onto the $1200. And you will never gain ground on the $1200, most likely go behind over the long haul.

You won't even get 4% with a 5 year term GIC (Guaranteed Income Certificate) at any bank here.

Paid for? :D
"No amount of belief makes something a fact." James Randi

1 Thessalonians 5:21

2020 Polaris Ranger 570 to forward firewood, Husqvarna 555 XT Pro, Stihl FS560 clearing saw and continuously thinning my ground, on the side. Grow them trees. (((o)))

Handy Andy

  Seems to me you have to rent your property from the govment and the insurance company.  Expenses are high.  Half a million is chicken feed. If you own it.  If you owe it, it's huge.
My name's Jim, I like wood.

pigman

Quote$1200 to live if you make a car payment
Car payment! :o I have never made more than one vehicle payment. If I don't have the cash I don't buy. I am so poor that no way could I pay banks to lend me money for personal things. I have borrowed to increase production, but never for personal things. I have always had such a low income that I couldn't afford to give my money away. It is supprising how cheap a family can live if they have not already spent their money on things they don't need by financing everything they want.
Things turn out best for people who make the best of how things turn out.

SwampDonkey

Interest rates for vehicle financing are low. Most will finance a vehicle even if they have lots of money. Financed or not it still costs money at some point: purchase, license, insurance, fixing, gas, tires............. never ends. ;D Of course you could buy a clinker for $1500 or less and spend $$ to keep it going until it finally calves and do it all over again with the next one. Just the basic insurance on an older car is at least $600/yr, not full coverage. And if your under 30, and male, about $1800 even with no bad record. ::) If you want to go to work, usually you need a vehicle, therefore it's not a want. That being said, if I were a city dweller I would never buy a car. ;) Use the transit system. Otherwise it becomes a want to own a car in the city because you "want" freedom of mobility. You don't really need it. ;D
"No amount of belief makes something a fact." James Randi

1 Thessalonians 5:21

2020 Polaris Ranger 570 to forward firewood, Husqvarna 555 XT Pro, Stihl FS560 clearing saw and continuously thinning my ground, on the side. Grow them trees. (((o)))

LOGDOG

You're right SD. When I lived in Brooklyn, NY for a short while I walked everywhere or took the train. (I did some volunteer work out there for a while.) Most of the time we hoofed it. We'd actually walk from Brooklyn, across the Brooklyn bridge and go to China Town and Manhattan almost every other night. I was 19 then though. I remember how tight my calves were from all the walking. I wasn't used to it. At least not on asphalt.  But out there, even "parking" a car costs a bunch of money because there are so few places to park. So people that had cars kept them in lots that had security guards. Seemed like a hassle.

You know I heard a statistic on the radio the other day. They said that 1 in 5 males between the age of 25 and 50 willfully DO NOT go to work everyday. That's 20% of the male population. Because it's been such a prolonged trend, it also doesn't show up in the unemployment numbers to the extent that it should. You have to know these guys aren't focused on their future because if they were they'd be out taking measures to make sure their futures were secure. That alone would help boost the economy. I'm not sure what the percentage of adult males in the American population of 300+Million equates to but I have to think it's significant. There has to be something they can contribute.

On the double dip recession ... It seems just a week or two ago they said that it's official ...housing in the U.S. has hit a double dip. It'll likely be soft for an extended period yet. I'm very, very curious to see what happens after June 30th when QE2 ends and they stop pumping fake money into the economy. Will it keep running under it's own power at the same pace it has been? Or will it do a nose dive? It will be interesting for sure.

pigman

Quote from: SwampDonkey on May 20, 2011, 03:55:46 AM
Interest rates for vehicle financing are low. Most will finance a vehicle even if they have lots of money.
Interest rates around here for a new vehicle run about 6.5 %. CDs are paying 1.5% on a 5 year note.  Someone with a lot of money is  silly to finance a car and have money in a CD. I know , they advertise 0% interest rates on vehicles, but you can pay cash and get the asking price lowered by $1500 to $2000. I am too poor to loose 5% on my money.
Things turn out best for people who make the best of how things turn out.

SwampDonkey

Actually, depends on where you buy a vehicle to. I can save $1500-$3500, in my experience, if I don't buy one locally. Same vehicle. Or get more on trade. :D
"No amount of belief makes something a fact." James Randi

1 Thessalonians 5:21

2020 Polaris Ranger 570 to forward firewood, Husqvarna 555 XT Pro, Stihl FS560 clearing saw and continuously thinning my ground, on the side. Grow them trees. (((o)))

LOGDOG

I actually sold vehicles for a year and a half and almost bought a car dealership in WI. Truth be told, you can get the discount without paying cash, and in fact we'd be more likely to discount the vehicle if you were going to finance it with us because we made money on the financing end. A cash deal is not a money maker for the dealership.

All that said, my opinion has been "pay cash for depreciating assets and only finance assets that appreciate in value or have positive cash flow(to help offset interest you pay.)

Have any of you read Robert Kiyosaki's books? One in particular "Cash Flow Quadrant" makes a person think about when and how to finance assets. I've enjoyed all of his books.

pigman

QuoteA cash deal is not a money maker for the dealership.
Any deal that is a better money maker for the dealer is a deal that takes money out of the pocket of the customer. ;D
Things turn out best for people who make the best of how things turn out.

Raider Bill

Actually the sale of a new car is one of the lower profits in a dealership not all but most mainstream dealers anyway. The biggest money is in the fiance and insurance dept followed by used car sales then parts and service. New is mostly on the bottom. They sell new to get the other money in the door.
The First 70 years of childhood is always the hardest.

Kansas

One thing I always do when we trade New Holland skid steers is make sure we get the insurance through them. Its cheaper than through my regular policy by quite a bit.  The other nice thing is if we pay one off, we can keep the insurance going. We also do use them for financing. I know that those low teaser rates that we pay causes a higher price for the machine. But it still turns out to be a pretty decent deal.

Cedarman

Besides, the banks laughed at us when we went to borrow money for machinery.  The companies worked with us just fine, even gave us a credit line for parts and repairs. (They should considering they gold plated everything)
I am in the pink when sawing cedar.

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