Cut Where it Hurts The Least

December 4, 2009 08:05 AM

The days when farm families skimped compared with their town neighbors are over. Farm children today expect the same must-have electronics, fashion and vacations as the offspring of their teachers or doctors. On the whole, farm parents meet those expectations. However, there are times when economy is the order of the day. We are in one of those times, regardless of where you live.

"The impacts of the recession have not missed rural America," says Mary Ahearn of USDA's Economic Research Service. "Farm households are feeling the impacts." Indeed, USDA estimates average farm household income in 2009 at $75,895, down 5% from last year and 8% below the five-year average.

Full-time farming families without off-farm jobs may be hit harder, because USDA projects farm income to drop a whopping 50% this year.

Before you tell your kids no new video games or your wife she can't hang new curtains, look for places to cut that carry high costs and aren't high emotional-reward zones.

Health Care. Farmers frequently complain about the high—and rising—cost of health care and health insurance. However, only about 15% of members of households of principal farm operators are uninsured, USDA reports. "But they do pay more when they have to buy private coverage," Ahearn says.

High-deductible plans that are designed to mainly cover catastrophic illness can lower premiums by as much as 20%, although they raise your out-of-pocket costs.

If you have taxable income, health savings accounts can reduce your out-of-pocket costs because they are funded pretax.

Negotiating with your health care provider also may lower costs.

Energy. Sometimes it takes money to save money. This year, you may want to consider investing in energy efficiency: Uncle Sam will foot part of the bill (see "Energy Rebates, Credits" below).

More than 70% of the energy used in our homes is for appliances, refrigeration, space heating/cooling and water heating. Replacing a clothes washer made before 2000 could save up to $135/year; replacing a refrigerator made before 1993 can save up to $65/year.

Fun. If you haven't been on a vacation recently, maybe this is the time to consider bonding with your family: The recession has greatly reduced costs. How does seven nights for the cost of four at Disney World sound?

Energy Rebates, Credits:

> Rebates for Energy Star appliances.

> Federal tax credits for more efficient windows, doors, water heaters and heating–air conditioning. Check for state and local incentives, too.

> Tax credits on 30% of the cost ($1,500 total) for biomass stoves, heating–air conditioning, insulation, roofing (metal and asphalt), water heaters, windows and doors in service by Dec. 31, 2010.

> A 30% credit (no limit) through 2016 for geothermal heat pumps; solar energy systems, including water heaters; small wind-energy systems and fuel cells. Check for state incentives.

> Credits for hybrid fuel-electric, alternative-fuel or fuel-cell vehicles. See

Top Producer, December 2009

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