Communication and cashflow are key to avoiding financial stress

Case one

Dear Money Mentor,

I have an honest, private and personal story to tell you about my finances. For the past number of years I have been dealing with the bank for three mortgage loans and one business loan, that were (and some still are) in arrears.

I am nearly through the financial torture now, but I would like to explain to you a couple of things I did to stop too much stress and repossessions, etc.

Firstly, I was in communication with the bank. When I first rang the bank I told them my income had all changed. It immediately kicked in an interest-only repayment plan on all my loans. And this was done over the phone – but a temporary arrangement for three months.

So then I had to start working out financial statements. The first one was very hard, but this allowed the bank to decide my repayments for the following six months. Then I started understanding how it works. I always contacted the bank six weeks before the repayment plan expired and got it extended as agreed.

The bank used a private company to look after two of the mortgages. The bank looked after the home mortgage and the business branch looked after the business loan. So it was fairly tricky giving details to them all.

The business loan was nearly sold to a vulture fund last year. I communicated and kept at them until they just put me on a longer-term repayment plan. I was always paying about half the amount, as agreed with them. All loans are gradually being put on longer-term repayment plans, which we can afford.

The second thing I did was a very simple Excel spreadsheet to monitor my cashflow. It’s like a bank statement that goes into the future, day by day, for the next few years. It’s simple to set up. Just put a calendar month in the first column, then carefully put in direct debits and details, all similar to a bank statement.

Then put an “in”, “out” and “total column”, and use one easy formula to set up the total. Then copy and paste the month 12 times for a year. Then copy and paste 12 months a few times to set up a few years. Now go back and get the calendar dates column correct and check everything carefully. Then input date of grants, and all farm purchases and sales as you think they will happen, in the correct time of year.

Finally, go online to your bank account and get your bank balance at the moment and use this as the start of your cashflow spreadsheet.

Setting it up takes a while, but every week you can go into your future bank account, update your bank balance and you can see your cashflow in an instant for the next few years.

This allowed me to get my financial statements correct to deal with the reduced repayment plans we were on for the last number of years. I will always be using this to decide on any future purchases on the farm, For example, it lets me calculate how many 18-month-old cattle to sell now to have finance for calves and milk powder next February/March.

We still have a few more years to go to get finances back on track. I am trying to stock the farm now, and I have to set up the farm and stocking levels without borrowing to do it. To do this, I am rearing Friesian bull calves to 18 months, selling timber from trees on the farm, selling small square bales of hay, and getting going at some of the grants, ie entitlements, ANC, forestry and GLAS. In all, I reckon the whole process is taking about 10 years, but the first couple of years were the hardest ones.

This might be a story of interest for you. I definitely would not want my name mentioned.

Everybody should be using the cashflow spreadsheet to manage their finances, but especially people in financial stress.

Thanks

Drystock farmer

Co Cork

Dear Drystock farmer

Thanks for your story. I think it will inspire people to communicate with the bank and to do cashflow plans themselves, or get help with them. I have always said they are a powerful tool to control your finances. If others have a similar story, they can email pyoung@farmersjournal.ie

Case two

Dear Money Mentor,

I was reading your page in Country Living about stamps. My husband is self-employed and paying the class S stamp. Recently a neighbour, who is also self-employed and paying S-stamps, took ill and was told he is not entitled to social welfare, ie sick benefit, etc. This seems a discrimination against farmers and the self-employed. It is very worrying for the future as no one knows when they won’t be able to work due to illness.

Hope you can reply and shed some light on this matter?

Regular Reader

Dear Regular Reader,

If you are self-employed you pay class S PRSI. Farmers are included in people who pay class S. You are right: class S contributions only cover you for a limited number of payments. In general, they do not cover you for any short-term payments, including illness and disability payments.

They also do not cover you for Jobseeker’s Benefit. If you satisfy certain conditions, class S contributions can entitle you to:

There is talk of changes, so hopefully this will happen. CL

>> Succession-planning workshop

Start the conversation early

There are still a few places left for the succession planning workshop being organised by the Irish Farmers Journal and Succession Ireland. The second date is on Wednesday 22 November at the Knightsbrook Hotel, Trim, Co Meath. The price is just €150 per person or €250 per couple for the day. This includes lunch, teas/coffees and a workbook. To book, call 01-4199578. Places are limited and couples are encouraged to come. The target of the one-day workshops is to help families start the conversation and develop their own succession plan.