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Agproud Q. 6 Charity

Question 6. What cause do you care about and how have you supported your favorite charity?

My wife and I strongly feel it is important to help kids. Roughly one in seven kids in our area does not have enough food to eat. Over the years we have helped with several fund drives to help children in our area.

Currently we support our local Back Pack Program. The way this works is children in need are given a back pack full of food and vouchers to take home over the weekend, when they otherwise may not get anything to eat.

I do the easy part, I just donate money. The money is used to purchase the food, and volunteers then fill the back packs. I know the money I give is important, but I do want to say that I feel it is the volunteers who organize this program every year, and the people that take time out from their schedule to help fill the back packs are who really makes this program come to form.

One evening when my wife and I were grocery shopping a little girl who knows my wife came up to her to say hello. This girl was so excited that night because she was going to have pancakes for supper. She received a back pack with pancake mix, fresh fruits, and vouchers for some milk and eggs. She told us that there was enough that she was also going to have pancakes for breakfast the next morning! She even informed us how the back pack program works “these nice people, I never met give money so I can have food to eat”. That comment got both my wife and I choked up. Even though that happened a couple years ago I got a bit teary eyed just typing it.

I want to mention the Back Pack Program got started here by a leadership class through our local Chamber of Commerce. They started this several years ago and it has had a residual lasting effect.

One of my wife’s high school classmates had a little girl with a brain tumor. Another woman in our community wanted to put together a fundraiser to help with medical expenses. She wanted to do an auction and a free will donation lunch. She was asking for help on Facebook. I told my wife to message her and tell her that we would donate enough ground beef to serve at least 600 people, and also a beef bundle as an auction item.

Going back even further we started a fun program at our church. We donated the beef from a calf to our church, and some of it was sold off in a silent auction. The money and the remaining beef were used to serve needy people in our area. The parish really had fun with this. One thing they did was hold a name the steer raffle, to earn some extra money.

We would not be able to do any of these things if we had not been so blessed to be in the cattle biz, and I had not learned the right things from the right people.

 
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Posted by on April 22, 2016 in Uncategorized

 

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Agproud Q5 F.E.A.R

Question 5 on the Agproud list

What allowed you to move beyond fear and diversify a perspective of your farm/ranch/business?

screwfear

This is a great question! Much has been written on the subject of fear over the last century, and strangely enough, all this time later it is still a huge problem. That is probably because fear is one of the strongest human emotions there is.

First off I’d like to share my favorite definition of fear. It is an acronym F.E.A.R. standing for False Evidence Appearing Real. Now that may need an explanation for some people. Most of the things we fear demand that we believe in something that we can’t see, or that may not actually happen. Fear is an emotion, and as such it tells you nothing about reality other than something makes you feel something.

Since most of my blogging and expertise is in cattle I will continue to focus there for an example. Many people would like to be in the cattle biz. Thing is they conjure up all kinds of “reasons”, more like excuses, why they can’t be. For example I have seen fear freeze people solid when they go to an auction to buy cattle. The most popular excuses are they are afraid, there’s that word again, that the market will go down. They are afraid the cattle may get sick or die. They are afraid the weather may deal them a bad hand this year. They are afraid that if any of these happen they will lose money. They are then afraid that if they lose money the bank will take things away from them. They are afraid of being a laughing stock.

That is quite a list of things to be afraid of, and emotion. We are all human and have all stared these fears squarely in the face. It will suck the energy right out of you.

Some of you may be thinking that I made a list of things that are very real, yet called fear false evidence appearing real. Thing is, all the things in that list are not real, because they have not happened. If you let them stop you from bidding on cattle or starting a business, you just let images in your mind that are not real stop you. Do not create troubles in your mind that have nothing to do with reality and waste precious time. You can’t stop the bad stuff from happening, but you don’t have to let the fear of bad stuff happening stop you from the good things that are happening now. That would be recognizing opportunity. You see everything on that list is manageable, and will provide an opportunity.

Every successful person begins with two beliefs: 1) the future can be better than the present, 2) they have the power to make it so. Every morning when you wake up you have the ability to choose your attitude. You choose what ideas to become emotionally involved in. Whatever you focus on will expand. If you create scenarios in your mind that create fear, you will be given things to be afraid of. The universe has a funny way of doing that. Whatever you think about comes about. You see your beliefs cause your thoughts, actions, and emotions, which when added up will equal your results.

So here’s the trick. Both fear and faith demand you believe in something that you can’t see. Faith is putting your trust in the good. Fear is putting your trust in the bad. You can easily change your future by changing your attitude. Have faith in your best outcome, instead of fear in your worst outcome.

So how do we build faith in such a volatile business? In one word: skill. Yup, here I go harping on skill again. Go back and look at the list of common fears in the cattle biz again. Market crash, natural disaster, death loss, poverty, and humiliation. With the right skills, and the right attitude you will find opportunities in all of these.

I have spent my time, and money traveling around the United States, and even Canada to learn from people that were/are the best. I learned valuable skills from them.

At first I was skeptical that the things I had learned would actually work. I placed some trust in them, and they did work. Overcoming fear and having success builds self-confidence. When you let fear control you, you lose self-respect, and that is a downward spiral. The only requirement is the ability to act, and action is the real measurement of intelligence.

At the end of the day just make sure that your own worst enemy is not living between your own two ears.

 
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Posted by on April 15, 2016 in Uncategorized

 

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Q4 Agproud Lessons Learned

Question 4: How did your business get started? And lessons learned.

I started my stocker/feeding operation from scratch, when I was 21. I started with $6,000, and bought 15 head of fly weight heifers. They were mostly the junk no one else wanted. Over the years it grew from there, and in less than ten years became big enough I no longer had time for an off the farm job.

That previous paragraph just busted a huge myth, and destroyed many excuses.

I had to learn a great many things along the way to be successful. I am grateful every day for the people that came into my life and taught me the things I needed to know. Contrary to popular belief we do not inherently know the correct things.

I wanted to be the best, and one thing I learned from Rodeo was that if you want to be the best you had to study the best. That’s what I did. I have traveled around the country to learn the cattle biz from the best. I’ll give you a hint on how to find them, they are not in the universities.
It is always important to earn money. When you start young and broke there seems to be more of an urgency to succeed. I went to a marketing school, and it all just made sense. The skills I learned there changed my life, and the future for my family.

I learned stockmanship skills from the master. This helped eliminate problems, and the need for extra labor.

I had to learn to structure and manage a business. This topic right here is why most production agriculture operations fail, or are run as failures. I feel it is extremely important to point out, that most of the ag bloggers I have read are clueless on this topic and it is evident in their writing. The only reason I bring this up is so people may learn to recognize it and not accept any of their points as truth. I fear their writing sets a very dangerous precedent for young people getting into agriculture.

One of the hardest things I’ve faced in my business was making the leap to being a full time cattleman. My operation had to pay my salary, groceries, all the different kinds of insurance I buy, equipment purchases, feed, rents, and the list goes on. This is why marketing skill and business structure are so important. Doing this properly eliminates much stress. It also eliminates the desire to assign blame and come up with creative excuses for when you fail, and don’t want to take responsibility for it.

You have heard knowledge pays the best interest. Thing is very few actually heed that advice. More and more people rely on technology, that in reality is letting them down without them knowing it. I am talking about learning old school skills. By learning these I have been able to eliminate problems, and drastically cut overheads. What is old is new again

Another big lesson I’ve learned is to understand ecology. The more I learn about nature the more I’ve change my operation to work with it. Sounds simple, I know, but so many in production ag spend most of their time and money trying to dominate nature. You can read about our quest to dominate nature every day. It’s in the research papers, blogs, and magazines. It is so engrained in us we do not even realize it.

Who you marry will have a huge impact on your success. So will how you behave in that marriage.

Critical thinking, decision making, and problem solving skills are a must. I should’ve tied this in better with business management. Sometimes the most important thing is not knowing what to do, but knowing what not to do.

I also want to point out the reason most generational operations fail is because the old man held onto all the power, and never included the kid in the decision making process. This is why you see so many people who finally get to take over the farm, when in their 40’s or 50’s and they can’t do it. They just lock up.

Last points, communication and listening skills are important, but most people do not have them so you will constantly have to double check. Also people like to play dumb, and are dishonest, so trust no one, again double check.

 
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Posted by on March 4, 2016 in Uncategorized

 

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Agproud 2

The second question on Ryan Goodman’s list:

Write about the basics of farming and ranching.

We can have all the discussions possible about the different practices in production agriculture. As I stated in my response to question one, we are in the business of growth and promotion of life. Thing is, it all hinges on one thing: Profit.

To some farming is a hobby, and therefore profit does not matter. For most of us farming is a business, and profit is to a business as breathing is to life. If there is not a profit the likely hood of losing the farm is high.

I spend time everyday looking over market reports. I have them bookmarked on the computer, and on my phone. I just scroll, click, and boom, I have access to weighted averages from cattle auctions all over the United States. Marketing skill is the number one contributing factor to profitability, so it is essential to always be up on this. Since I sell and buy, pot loads every month I must know what is going on with the cash markets.
One thing I do every month is what I call an autopsy. I go over every aspect of my business. Today my business is whittled down to my “hedgehog concept”, the one thing I’m best at. I used to have many more different enterprises. I believed I needed them for diversity, and at the time I did need them. My hedgehog concept became evident to me, through these autopsies. It was clear that I should devote more resources to it and disperse of the other enterprises, making the best use I could of my resources. I look at things like my return on assets and return on investment, and even the time/labor I committed to them

As a result of these monthly sit downs, I know exactly what my break profit cost of gain is, on the cattle I own. Notice I said break profit, and not break even. You can go broke breaking even, so I always include profit as an expense. My salary is figured as an overhead expense to the business, and I figure profit as a direct cost.

Every month I do a budget for the upcoming months. I gauge the accuracy of my budget during the autopsy. I have been doing this for years so I have a good feel for what each month will be like. While doing this I also do a projected cash flow for the upcoming months. This is useful for long term and short term planning.

After completing these tasks I find it much easier to go out and do the day to day tasks. I am not worried about my account balance, or what the market may do, I do not fear having to talk to the banker, and the demons of fear do not come into the bedroom at 2 am, waking me up. Knowing everything is in check allows me to focus with a greater intensity on the wellbeing of my animals, and any other tasks that I need to complete.
Looking after my business is the foundation of what I do. When that is stable I can build from there. One thing I do to reinforce the foundation is to read several business books every year.

Another basic is how you see yourself. If you see yourself as a broke farmer, then that is what you will be. If you see yourself as having a growing, thriving operation that is making a profit then that is what you will have. It is not quite that easy though. The people that see themselves as being a success and firmly believe it, without doubt, are the ones who are willing to go out and learn the things that they need to, in order to make it happen.

I understand this may be a different direction than most would think when responding to this topic. Feeding the livestock, or putting seed in the ground are basic necessities too. You can do those for someone else as an employee, but if the employer doesn’t do the basic task of looking after his business, that employee may be out of a job sooner than later. As capital intense as agriculture is you simply just can’t out earn stupid.

 
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Posted by on February 19, 2016 in Uncategorized

 

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Where’s the Benefit? (bread & milk)

Last summer I was in a room of about 40 cattle producers from all over the US, with all kinds of different back grounds and strengths.  I don’t think I’ve ever been part of a more diverse group.  One question that was presented to us was “How does your ranch benefit others?”

Right away the first answer was BEEF.  I will say this, that person went home realizing they are a cattle producer not a beef producer.  There were some ramblings about conserving the environment, and taxes.  Then it was just quiet.

This was something I had thought about before, so I spoke up.  I sell and buy cattle all the time.  I need truckers to move them critters down the road.  That driver uses the money he earned from me to pay his taxes, fuel that he bought somewhere, food from a food service establishment that provides jobs to people, tires and other maintenance, insurance, and so on.  What is left over he keeps the lights on in his house and bread and milk on the table for his family.

I buy feed from family and neighbors.  They must make machinery payments, farm payments, maintenance on the equipment, pay for fertilizer, fuel, seed, and so on.  One guy I buy feed from has three kids, all under the age of three.  He forks out a lot of cash for bread and milk.

Don’t forget the mom and pops feed store I do business with.  They got to pay their suppliers, and employees, along with utilities, and equipment, insurance, taxes, and so on.

I buy cattle in sale barns, who obviously have employees, and other expenses.

You’re getting the idea.   A little bit of money gets spread pretty thin and everyone is trying to pay for bread and milk.

A sale barn needs buyers there to establish a market through open price discovery.  As a cattle buyer I have aided in that process many, many times.

One day I was buying cattle and need to recycle my coffee.  I stood at the top the steps for a moment to see what was behind the gate coming into the ring.  In came a small group of three or four heavy four weight heifers, black.  They would fit a deal I had going, and I needed some weight and some average makers. (average makers are the cattle that get bought cheap, to add weight to a load and lower the average dollars/hundred).  I stood there and watched until the bidding stalled, then jumped in.  I hit them three times, and owned them, improving my average.

Now that scene is no big deal to me.  I do that all the time.  Here is why I remember that day so well.  After I left the head, I went to the office and got a recap (recap is a printout telling me how many cattle I have on each of my numbers, what the average weight and average price per hundred is.  Also tells me total dollars spent and total pounds on each number).  This guy comes up to me and thanked me for buying those heifers I just told you about.  I kinda tried to blow it off, and said “you’re welcome”.  He said “No. You don’t get it.  Every little bit helps.”  I  then stepped outside to call a guy I had just finished putting a load together for.  I watched the guy who just thanked me get into a car with a young woman who was feeding a baby.  He showed her the check and gave her a kiss on the cheek before starting the car and leaving.  I bumped them calves about $25/head.  He got about an extra $100 because me and another buyer pushed them.  Having a little one of my own, I know $100 is barely a dent when it comes to bread, milk and diapers.

I’d like to share another example with you all.  I’m totally bragging here, it’s a good one and I had fun doing it.

The last week before all the kids went back to school last fall, one young teenager was sitting in a local sale barn trying to buy a few calves.  One group of calves came in the ring.  This kid started bidding on them.  They were way too low to just sit there so I hit them a few times.  I pushed them to where they were a good buy and a somewhat decent sale price.  Then I pointed at the kid as a sign for the auctioneer to knock them off on him.

Now to set this up a little better there is always some old asshole that never leaves well enough alone.  Back when I was younger and fiercely needed a few breaks, (good buys) this old grumpy fucker would always jump in and run me.  Well he did the same thing to this kid.  He ran the youngster right up to about what the market was bringing for those calves.

The poor kid shook his head “no”  He was out.  Now, I have NEVER jumped back in on bidding on some cattle after I decided I was out.  I had the money to run this old man, and my anger at him for doing that to me when I was younger came out.  I ran him.   I hung those high dollar calves on him.

This exact same scenario was repeated on the next group of calves that came in the ring.  Everyone in the place got the hint.  We were all going to let this kid have a few calves at a good price, or I was going to fuck with you.  The auctioneer is also the owner at that barn and boy was he having fun with the situation.  That kid got all the calves he wanted (about eight) and he swelled up with so much pride I thought the buttons were gonna pop off his shirt!  Next week he was back in school and I was back at the same barn buying cattle.  I made a win/win situation

Gang, I could list tons more examples of how our operations benefit others.  We often times don’t think they do because we rarely take the time to reflect on it.  This is just everyday stuff to most of us, thing is, it matters to somebody.

 
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Posted by on June 3, 2014 in Uncategorized

 

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Lessons From the Gridiron

This time of year in Nebraska, and probably every where else, conversations always seem to turn to football.  I like the game just as much as the next guy.  I will sometimes listen to the sports nightly shows.  If I’m busy on a Saturday, I have a friend text me updates from the Husker game.   I am now at an age where I have friends whose sons play high school football so I kinda try to keep up with that too.

Now as much as I like the game, I often times think we put to much emphasis on sports in our society.  If  you don’t read this post all the way to the end, at the conclusion I still think we place to much emphasis on sports.  Thing is, I had a conversation with a buddy of mine recently that made me take pause and reexamine that stance.

My friend and I are on opposite ends of the athletic spectrum.  He had talent and ability, I had none.  So our stories differ.

I’ll start with my experience.  My sophomore and junior years in high school I didn’t get to play much at all.  I was in a cast both years before school started so I missed out on most all the season, due to healing and rehab.  I went to all the practices, and games.  Watched it all from the sidelines, while wanting to play, regretting what happened to me to keep me on the sidelines.

My senior year I was healthy, and in good shape.  I loved it.  Everything from the conditioning and especially the hitting.  One big problem though.  I was kind of a small kid, so the underclassmen were about the same size as me, had just as much experience, and were a bit more athletic.  When the season started I got to start on offense and the underclassmen got to start on defense, and we alternated series on either side of the ball.  Our team sucked, I’m not sure if we even won a game that year, so the underclassman got more playing time.  I didn’t like it, it sucked.  But hey, it’s a fact of life

A few games into the season, at a home game no less, they introduced the starting D.  I got to stand there as all my classmates ran on the field when their name was announced.  I got to stand there when the sophomore that I was sharing time with got to run on the field when his name was announced  as well.  Things changed in that game.  Some time during the first half I was playing both ways.  During the second half I never got pulled off the field.

Being from a small town I know how things are.  After the game I took my time leaving the locker room that night, to let the other kids bug out.  I went into coach’s office and asked him if the only reason I was playing was because I was a senior.  He told me I was the only player who gave him 100 during practice and 100 during the games, no matter how bad we were getting our ass whooped.  He pointed out that during the games I miss a few of my assignments, but I never stopped.  If your jersey wasn’t the same color as mine, I was gonna hit you

What I heard was I would never spend another second on the sideline the rest of the year.  All I had to do was give 100 every day.  No matter how much I hurt, how tired I was, or how many times I was gonna puke, 100% every time meant 0% on the sidelines.

My buddy went on to play college ball at a small college.  He had some success there.  One summer he was home.  He’d been working out at the high school gym like a Beast.  Never in his life had he been bigger or stronger.  He was also working physical labor jobs, in the summer heat.  He, like any other kid from Nebraska had a dream of playing for the Huskers.  His plan was to try to be a Walk On.  I never knew that was the goal until just recently.  Here is the disgusting part.  He told some of the local fucktards his goal.  They made fun of him constantly.  They told him all the reasons he couldn’t accomplish it.  Like any of them had a clue.  Problem is, he listened to them.  All those hours of sweat and pain in the gym, eating the right foods, out the window.

He told me just about every time he sees the Husker tunnel walk he puts his head in his hands and tears up.  He will never ever never, know if he could have made it.  You shoulda heard the pain, the regret,  in his voice

Him and I learned quite a bit from the grid iron.

Giving 100 has its rewards.  Nobody regrets doing their best

Quitting lasts forever

 
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Posted by on August 26, 2013 in Uncategorized

 

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Cattle 529 Plan

Ever since I was a little kid all I wanted to do was farm and raise cattle.  Everything seemed so simple back then.  Just grow up and do what you want to.  We all had that dream.  When you get older, and especially when you have a kid, things get real.

In the last year and a half I have spent way more time in the lawyer’s office and CPA’s office than I care to in a lifetime.  I did not get into the cattle biz to learn all about LLCs, Trusts,  payroll taxes and crap like that.  Thing is I do get to do one money/parent thing I love.  Invest in my kid’s future with nothing other than cattle.

A couple years ago I got fed up with the stock market, and pulled all my money out of my Roth IRA, and used the money to buy cattle.  I’ve had a 20%, or better, return on my money since 2005 with cattle.  My IRA never did that.

So here is my thinking.  As a parent it is always a concern of how to pay for college, even though I would not recommend college, or how to at least give our kids a good start.  After Bernie Madoff ,  John Corzine, and computer generated trades I do not trust the markets.  Thing is I know cattle, so I stick with what I know.

Here is what I’m doing for my kid.  The numbers are based off my last trade just last week.  I know the cattle markets will move so for this example I am going to freeze these numbers for the next 18 years.  Thing is even in the last 8 years I’ve still managed to make a 20% return.  Keep that in mind

I market my cattle on a real time cash flow reckoning, so this allows me to always buy back replacement cattle at a profit.  You will need to learn how to do this in order for what I am about to outline for you to work.

So when my daughter was born I bought her five head of calves.  In this example I am using 480# heifers at $1.43 or $687 head.  So five head would cost a total of $3385.  We are going to back ground these heifers and resell them, and replace at a profit.  So in this example we are selling 730# at $1.33.  My real cost of gain is $.93 with a 2.75# ADG so when I add on a 20% return my cost of gain goes up to $1.15.

The 20% return is a $55/head profit.  Buying 480# calves and selling them at 730# with our rate of gain we get to turn 4 times a year.

Now those first five calves I bought for my daughter are financed through the Bank of Dad (BoD).  So when we do our first four turns in year one the BoD collects all $1100 of profit and subtracts it from the $3385 that was loaned to the new baby.  At this pace the kid pays off the first 5 head by age three and has $84 left over.  After this point we make the kid reinvest their profits into buying more cattle.  So after four more turns the kid will have enough saved up to buy 6 calves.  I think that would make for a pretty proud four year old.

Now I am going to assume you see the pattern here and I don’t need to do all the math for you and show you the year by year turns.

By age ten in this example the kid will have 37 head.  Since there was an income for a minor dad paid the taxes for them.  By now I figure it’s time to secure voter registration, and make the kid a tax payer.  Ouch!  So just figure between Fed and State tax kiss 15% good bye.  Gotta pay for the roads we are using to haul these cattle.  Long before we get to this point, a responsible parent is having/helping the kid pay bills, and balance a check book.  Lots of lessons to be taught here.  I have a buddy doing this with his kids, and it helps them to see there is a purpose in learning math in school.  Also all the lessons that come from helping, do chores.  Some real character building here.

Now by the time the kid is 14 we stop adding more cattle.  We stop at 75 head.  That is enough for a pot load.  Also when we stop at 75 head after the first turn we have the rest of the year to do the other 3 trades and save money.  At 14 what kid doesn’t want a car?  So, let them buy one with their own money.  They will have enough.  Also let them pay for some gas, tax, title, insurance and so on.

Now after the car is paid for with cash, we have a decision to make.  Do we just hold it here with 75 head, or do we keep buying more?

For my example here I stopped at 75 head and just started saving money.

By 18 the kid will have 75 head of cattle worth $72,000 and saved $39,000, and spent $35,000 on car, gas and so on.  So our original investment of $51,500 turned into $146,000 in 18 years.

Now I know the doubting Thomas out there is thinking well you didn’t figure feed and so on.  That was in the cost of gain and subtracted from the dollar difference between selling the 7 weight and replacing with the 4 weight.  Leaving us with the $55 retained profit.  And it took 14 years to get up to a load lot.  This is a crockpot not a microwave.

Now what if we took that $51,500 and invested it into a 529 over 14 years, and stopped and then just let the interest compound for four more years until the kid was 18.  At a 10% rate of return we would have $169,000.

I really think cattle can compete with a 529, IF you market correctly.

This is what I am doing for my kid.  Now according to this example the 529 out performed my cattle plan.  Thing is the 529 didn’t give a sense of accomplishment, or ownership like the cattle do.  The 529 didn’t teach responsibility of paying bills, buying and caring for a car, and cattle, managing cash flow, or understanding where money comes from, and marketing skill.  The 529 didn’t teach the kid how to run a business, and looking at how many animal science and ag business majors corkscrew operations into the ground college didn’t teach that either.

So when my kid is 18 there will be three choices to make.  1) Go to college, keep the cattle and hire dad  to take care of and manage it and use the income for school, or sell them off and go to school, with the goal of graduating debt free.  2) Sell them off and pursue something else.  3) Continue to do the cattle thing.  And I can tell ya with a track record and cash flow like this even at 18 a banker will finance the youngster, with daddy’s supervision of course.

Now suppose I’m half right.  And after 18 years you only have a net of $70,000.  Still pretty damn good.   What if I’m half wrong and by 18 you have $300,000?  Wow!

My kid is two and already owns 6 calves all on her own.  But she gets to take advantage of my buying power too.

Dave Wright President of Independent Cattlemen of Nebraska (ICON) said something to this effect once “I raise kids, the cattle are there to help me teach them life’s lessons”

 
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Posted by on March 11, 2013 in Uncategorized

 

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