Great Lease

1. I didn't recommend anything based on experience or lack of. I simply commented on strategies.
2. The minute you buy a truck, you start a business. The business side of your financials takes care of ROI and depreciation. You were only speaking of personal savings. If all you stood to gain from being an o/o was $6k over 4 years, whether you paid cash or financed, it wouldn't be worth it. I haven't even touched on the realities of the pre tax investments and deductions that become available as a business owner.
3. Your set in your strategy which is fine. It's not the only strategy nor the best, but it works for you, and that's all that matters.
4. I've been a successful o/o for over a decade. I'm definitely not focused on the short term, but hey, you know everything.

 

I never advocated leasing. Please reread through the tread. Id welcome your advise if you still had for me some afterwards.

 

Since an inexperienced o/o would have been the end result of your advise ya you did.

So if your convinced that your plan is better id be interested to hear how. You stated some facts in your first post but you forgot to include asset depreciation into your numbers. When i added the depreciating value of the truck to your numbers they didnt look so good. Will you show me mathematically how it is financially advantageous to finance a truck that INCLUDES the depreciation. Id love to hear it. Im not interested in hearing about how pretax investments that become avail as an o/o compare to my current 401k with employer match. The original argument was simply is it better to pay cash (for those that can) or finance a new truck can we stick to that please. Also if you cant present a reasonable argument that includes numbers and actually makes since. Then im going to have to go out on limb hear and assume that you are just objecting to my plans because you dont like the idea of someone doing something that you cant.

 

Just because you have little experience, doesn't mean everyone reading this does. Every o/o is inexperienced when they buy their first truck. I bought mine, cash, with less than two years experience. I bought my subsequent truck cash as well. I financed my third truck. It was used, but at the time (2005) buying used was smarter than new. Times have changed thanks to emissions laws, and I think new is the smarter buy, currently.
The only differences between saving for a truck and financing a truck are lost opportunity revenue while saving and paying interest on the loan. That's it. Depreciation will come whether you pay cash or finance, the fact that you're delaying the depreciation 4 years has little bearing, as you're also delaying your increased income. Depreciation comes no matter what and as I said before, depreciation and ROI are addressed on the business side of the financials. The reason to become an o/o is to make more net money, or for some, to take control of their lives. I do both.
130,000 loan at 7% over 4 years, you pay $29,423 in interest. A typical company driver makes $50k a year. There isn't a typical o/o. Some make less than that and are home every night, some make 4 times that. I make roughly double that driving 60,000 miles a year, but I don't work much. If I ignored my family, and didn't have a life I could easily double that.
The bottom line is, what type of realistic net income do you anticipate as an owner operator, minus what you make now. Subtract the interest you'd pay (that's all we're discussing here, as that's the only difference between paying cash and financing) and see what you get. If you only net 90k and you're making 50k now, $40,000x4=160,000-30,000 (interest)=130,000 additional before the tax man. You can throw all the BS you want to justify your position, but in low interest times like we have currently, as well a decent steady freight forecast, you're lost opportunity cost will be much higher than your interest charges. An alternative to saving up the entire amount could also be using those higher earnings and paying off the truck at an accelerated rate as it appears you can live pretty frugally. A simple spread sheet that you can plug YOUR numbers into will tell you everything you need to know.

Just because you're all about telling everyone what they can and can't do, this is what I CAN do, at MY house. I don't live in my truck, and I try to sleep in it as little as possible. Eating breakfast by the pool.

 

you know one of the problems I have had over the years was quoting a reasonable freight rate and my competition under cutting me with the excuse "my truck is paid for". Can't understand why some one would want to run cheaper just because they don't have a truck payment,,that's the time to continue to demand good rates and sock away more money..

 

I completed 2 leases and still have the trk's free and clear. Lease didn't mandate where i took trk for repairs, did it myself. Didn't tell me where to fuel, where to buy tires etc trk was not speed limited. And as long as company was comfortable with drivers performance and knew they took care of the trk. I was able to take trk to another carrier as long as they got the monthly payment and they knew what carrier trk was leased too. Was not micro managed at all. Both were new trk's that i ordered,after i did a 1 year lease on an older trk and established myself as a hard worker and had a good safety record. So no not all leases are fleece deals. I took this route because at one time i had 3 trk's and trailers and ended up getting a divorce and had to sell everything and split proceeds with ex wife in divorce settlement and really screwed my credit. Maybe not some peoples cup of tea but it has worked for me and i built mt credit back up.

 

I see that all the time, I can haul cheaper than that as I don't have so and so expenses. I never get into price wars, and my current truck has been paid for since 2008. I like to have a nice life, nice house, send my kid to private school and college, etc. I'll always be priced more than the gypsy living in his paid for truck. I still get plenty of work, so I must be doing something right.

 

Thats the thing though i wouldnt make more as an o/o at least not with a truck payment. I would expect to make just a bit less especially at first i wouldnt expect my net to be at the top percentage of o/o's or even average im smart enough to know that it will take a couple years to make real progress in this area .I do not make 50k as a company driver i do much better than that. So without higher pay for the first couple years id just be depreciating an asset and exposed to alot of risk, why do that? Yes i realize that the sooner i start as an o/o the sooner i will be able to start improving my net. My current rate of savings which has also improved over time and is not at 30k/yr its much better, though when i first started this it was much worse. I feel this changes the ball game since given my current rate of savings it wont take as long as you think to get that truck. Combine that with the fact that i would not have thought it wise to become an o/o with a truck payment for the first couple years ive spent as a driver. So that two years is off the table, factor in my current rate of savings and the real amount of time i will have spent as company driver that i could have spent as an o/o instead is actually two years not five. Also figure this what would happen if i became an o/o financing the truck with minimum down and that new emissions truck turned out to be a lemon with emissions related engine problems. Think of the amount of flexibility i would have in that situation if the truck were paid for. Youve called me a "want to be" and spoken to me as though im foolish. Why would you assume that anyone thats capable of saving as much money as me is doing something wrong, clearly im getting results, especially this early into my career i think that those results are great and they will get better and better as i establish myself in this industry i must be doing somethings right. If you were able to sock away as much as me 3yrs into your career and you continued to do so for your 14yr career do you think you would still be working at all now? Had you taken that money and invested it wisely would you be financially independent? Would you have a mortgage? Would your home be in a nicer neighborhood? Look you and i are two different animals you want to work part time and still afford a decent lifestyle and thats great good for you. I want to work and little else for a decade and a half and then never work or worry about money again and im young enough to do so and still have plenty of time for a great life afterwards and that makes me happy. So dont condescend the choices i make in my life they are worth it and im proud of them.

 

I agree with that