In the first article of this series, we looked at the power of writing down what you own and what you’ve produced. Assets and inventories give you a clear picture of your strengths. But that’s only half the story. Every farm also carries obligations — loans, bills, rent, and promises to pay — that deserve just as much attention.

For many hay producers, this is the part that creates the most stress. Debt feels heavy, and the sight of unopened bills on the counter can make your chest tighten. Even when you’re keeping up, the uncertainty of how much you owe can linger in the back of your mind.

The irony is that what we avoid is often what brings us relief. When you write down what you owe, the fear shrinks. The numbers may not change, but your relationship to them does. Instead of guesses, you’re dealing with real figures on a page.

Every farm runs on some form of borrowed resources. Balers roll because a bank or dealer financed them. Fertilizer gets applied to hayfields because a supplier extended credit. Pastures get planted because rent was paid. None of these things are bad on their own. The liabilities only turn toxic when you don’t have a handle on them.

Writing down your liabilities isn’t about creating busywork. It’s about identifying what’s due to whom and when. Then, you can see your obligations stacked against your assets and realize you’re not operating blind anymore. Let’s clear up one misconception right here: Financial statements are for you first and bankers second. Too many farmers think lists like this only matter when the lender asks for them, but the first person who benefits from them is you. You’re the one with peace of mind, better decision-making, and the ability to talk with confidence about where your farm stands.

Three buckets

First, you’ll need to gather loan papers, statements, and maybe even call the dealer to confirm a balance. Then, you’re not building from scratch — you’re simply adjusting. A payment is made, a balance goes down, or a new bill comes in. The first list takes courage, but every list after that builds confidence. Categorize items on your list into three groups.

Short-term liabilities, due within a year:

• Feed or fertilizer bills on account at the co-op

• Rent due on leased ground

• Unpaid custom work or repair bills

• Operating loans or lines of credit that renew annually

• Credit card balances that are tied to farm expenses

Intermediate-term liabilities, due in two to seven years:

• Machinery loans, such as financing a new baler or tractor

• Livestock notes, such as a cow-calf herd loan

• Other vehicle loans for farm pickups or semis

Long-term liabilities, due in seven years or more:

• Farm mortgages

• Land contracts

• Long-term improvements, such as irrigation system loans

For each liability, note the lender or vendor, the current balance, and details like the interest rate, payment amount, or due date. Include payment schedules to use in cash flow projections.

Keep it simple

Similar to building an asset inventory, the more stress you feel about liabilities, the more often you should refresh your list. If things are steady, twice-a-year updates may be enough, perhaps at tax season and after harvest. If you’re a little uneasy, check in every quarter to keep surprises from piling up. But if you’re lying awake worrying about cash, then updating monthly — or even weekly — will turn that stress into something manageable.

Watching debt shrink, even slowly, reminds you that progress is happening. And then conversations get easier. Instead of giving your spouse vague estimates about how much you still owe on that tractor, you’ll have an answer. Instead of guessing with a banker, you’ll show them the facts.

Keep your liabilities list simple. Use the same notebook or spreadsheet you used to track your assets. Don’t overthink it: Write down who you owe, how much you owe them, and when that payment is due. Tie this practice to a routine, such as every time you pay bills. Then, share the numbers with your family or business partners. It’s easier to make decisions when everyone is looking at the same page.

Owned and owed

At this point in the series, you’ve got two tools: a record of what you own and a record of what you owe. Those pieces form the backbone of a balance sheet.

Debt isn’t the villain — almost every farm has it. The solution to debt is managing it with your eyes open. Avoiding it feeds the fear, but facing it shrinks that fear down to size. So, grab a piece of paper, and start small. Write down one bill, one loan, one rent payment, and then add another. Before long, the whole picture of your farm financials will come into view.

Financial stress won’t vanish overnight, but you can push back on it with tools that restore your control. A liabilities list is one of the most powerful tools, and it costs nothing but a little time. The returns are clarity, confidence, and credibility.

This article appeared in the February 2026 issue of Hay & Forage Grower on page 14-15.

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