When I was a kid, I remember doing a lot of work for five dollars per hour. I thought that was great at the time. Was that enough? At the time I sure thought it was, and I worked as many hours as I could.
As a parent, I paid my kids $10 dollars per hour when they were younger. Then as they grew older I slowly raised that rate every year to eventually reach $15 per hour. Was that enough? I thought so. I think they did too.
Now I hear people say that $15 per hour is not enough, but I also know people who get paid $30 dollars per our and they say that is not enough. I also know people know people who make $200 per hour, and they say that is not enough. So, what is enough?
With investments I know people with $50,000 and some with $500,000 and still others with $5 Million invested. Are any of those numbers enough? When is enough, enough?
With farming I know people who own 160 acres, and some of them do not think that is enough. I also have clients with 500, 1,500, and 5,000 acres and some of them do not think that is enough. So, what is enough?
Every time we have an increase in land prices, I always get a few calls from past clients where the parents wonder if all their children will get enough. Well, that is a good question. Let me think about the situation. This family has an off the farm child who has a pretty good job and a $300,000 house and the parents’ current plan will give them more than another $1 million. Isn’t that enough?
Recently I had a meeting with another client. When we had done their planning land was $6,000 an acre. Now they tell me land is selling around them for $16,000 an acre. I asked what their concern was, because I was not sure. We started by quickly outlining their existing plan, and they understood it perfectly. They liked how everything worked.
Then we put in the new numbers if they “updated” their plan. They saw the “new” numbers, and as expected, the two non-farming heirs would get more than before. However, the farm heir would have the land plus $7 million of debt and a land payment of over $700 per acre for 30 years after their death. They looked at the white board for a while and shook their heads.
I then wrote this on the board, “What concerns you more:
1. That your two non-farming heirs are not getting enough with your current plan?
2. Or that the “new” plan would not cash flow for your farming heir?
Mom said, “Both!” Dad said, “#2”.
However, they both understood that the only way their farm would stay together was if it cash flowed for their farming son. Their current plan already had the two non-farm heirs were getting a lot. Their decision was simple. Enough was enough.
But just to be clear, I asked them one more question. I said “As I recall you bought some land for $6,000 per acre around the time we were doing the original plan, correct?” “Yes”, they answered. “It’s a good thing we bought when we did.”
So then I asked, “What happens if the seller of that land came knocking at the door demanding $6,000 was not enough. He now needed another $10,000.” They said, “No way! We set the price and $6,000. That was enough”. Hmm, now that is interesting. The silence was golden. They nodded their heads again. There will not be any changes to that plan.
Now I am not saying that plans should never change or ever be reviewed. I am just asking, for your family, when is enough, enough?