Overview of Should I Leverage Debt To Buy Cows?
This Ramsey Network segment follows an 18-year-old cattle producer who is weighing two paths: borrowing money to buy his own calves for higher potential profit, or custom feeding cattle for another owner with far less risk and lower upside. The advice given is to avoid debt, move at the speed of cash, and prioritize long-term financial stability over faster growth.
Main Question
The caller currently:
- Buys and raises baby calves
- Has made around $60,000 profit on his first batch
- Can either:
- Borrow money to buy another group of calves and potentially make around $60,000 again, or
- Custom feed for someone else, making about $35,000/year with much less overhead and risk
His concern is whether the extra profit from owning the cattle is worth taking on debt.
Ramsey’s Advice
Don’t use debt to scale a risky business
The core message was that borrowing heavily to buy cattle is too risky, especially in a volatile business like ranching.
Key points:
- Leverage can go wrong fast, just like real estate speculation or gambling
- Cattle prices and disease risks make the business unpredictable
- At 18, he has time on his side, so there’s no need to rush growth with borrowed money
Focus on debt-free growth
Instead of borrowing, he was encouraged to:
- Keep working and saving
- Build cash reserves
- Expand only as cash allows
- Think in terms of where he wants to be at 23 or beyond, not just next season
Financial Tradeoff Discussed
Owning cattle
Pros:
- Higher potential profit
- More control over the business
Cons:
- Requires borrowing
- Higher risk
- More labor and management
- Greater exposure if prices drop or disease hits
Custom feeding
Pros:
- Zero overhead on calves
- Lower risk
- Easier workload
- Safer cash flow
Cons:
- About half the income potential
- Less upside than owning the cattle
Big Takeaway
The show’s main recommendation was to choose peace and stability over speed.
Rather than chasing the highest short-term profit, he was advised to:
- Stay debt-free
- Stack cash
- Build the business gradually
- Re-enter ownership later when he can do it without borrowing
Practical Next Steps
For the caller
- Run the numbers on how much cash he can save in 12, 18, and 24 months
- Compare that to the risk of borrowing
- Consider custom feeding as a temporary way to build capital
- Aim to grow into ownership later with cash, not debt
For listeners
- Even if a business opportunity can make more money, debt can magnify losses just as easily as gains
- Young entrepreneurs may be tempted to grow fast, but slower cash-based growth can be far more durable
Notable Line of Thought
A recurring theme was:
- “Move at the speed of cash.”
- More profit is not always worth more risk.
- If the plan only works when everything goes perfectly, it’s probably too risky.
Closing Note
The caller was encouraged to keep doing what he loves, but to build toward a future where he can own and grow the business without being dependent on lenders. The show also offered him a copy of Build a Business You Love to help him scale wisely.