I need some serious advice on what steps after I buy my truck

you might want to listen to kevin rutheford on xm 171 sirius 146
he has a dvd on buying atruck

 

Get some more experience!!!

You are doing this for all the wrong reasons at exactly the wrong time!
There are so many things that you are going to learn in the next few years that you don't want to "learn" while you're paying the bills for repairs to your truck and for the insurance to repair the "oops!" damage that you'll most probably do.

I grew up around trucks and I started at a very young age with a lot of help from the "old timers" around me and it was still an uphill climb!
In those days the trucks were a lot simpler to repair and the guys around you were a lot more willing and able to pitch in and get their hands dirty helping you fix it in the back row at the truck stop!
A new truck will not prevent the problems you will face in the first few years!

Be very careful...You have been warned!

 

Well i wish you luck as well. I like many others here grew up in this industry, my grandpaw, dad and 2 of my 3 brothers were o/o. And i've been in it all my life, minus 8 years in the military. You're in for a very rude awakening.... Not trying to be an #####$#$$e , but man 6 months experience, and already trying to make the move... Like others have said . Be very cautious because in todays economic state, it's getting harder and harder to make it. But like said earlier ,it's you're money and you're dream. So best of luck to you.. You will need it .

 

About 7 years ago (Sept of 2003) I got my CDL and started driving for Swift. In July of 2004 I became an owner operator with Swift. It has worked out fine for me. Some points:

1. Experience is overated, it's how you handle new and exciting things that will make the difference.

2. New trucks are overated. So what if the engine has a warrenty, it's not going to cover lost wages, towing fees and hotel rooms. Old equipment means that most of the engineering problems have been discovered and most of the mechanics have been trained on how to work on them.

3. Get a good accountant. My settlement income is cut roughly in half by all of the deductions that my accountant uses. (Note I have some rental and stock income that makes things a little bit messy)

The only thing that you are doing that I would disagree with is using your 401K money to buy the truck. If you have a good credit score you can find reasonable financing for the purchase. Interest payments would be tax deductable, and you would be able to claim depreciation on your taxes. A few years before getting into trucking I borrowed from my 401k and was unable to pay it back. Penalty and taxes pretty much wiped out what I had borrowed a few years later.

I've attached my 2009 settlement as an example.

Good Luck

 

Ok..I gotta chime in here with some rambling comments....
Have you even just RAN a quote on insurance?

I just ran it with Progressive and with a perfect MVR and high credit score (really important for the best rate) I am well over $5300/yr and thats with a paid in full discount. That was essentially just for the bare minimum too....
Insurance companies really don't want guys with little experience..so they nail you to the wall. And finding someone to lease on with, with less than 2yrs of OTR experience will also be a challenge.

I would continue to drive for ##### and keep researching this and building contacts along the way....there isn't any rush, if your life expenses are so low as you claim they are - take your time. Get to 1yr then make the move.

Perhaps pickup a used rig (with cash) like I did and repair/tweak it to your liking while your still running with #####...as long as you don't have a note to worry about, you can take your time with your new project.
Get it perfect - then move it out..
I would NOT buy any new rig. The new emission #### is just a mess, and as someone said, the older ones are easier to work on and the techs understand them better......

PS. I'm not leased, so all of these costs I have to pay out of pocket. DMV only accepts CASH/CHECK for plates.
IRP/IFTA/MC/HVUT/UCR/INSURANCE - also paid for my TWIC/FAST cards...more $..
I think the best part? - I bought this rig with FUMES in the fuel tanks. $1300 to fill her up to the top initially.

That was an attention getter for sure:

 

Finally somebody posted up about the most difficult part....INSURANCE! The problem is that most companies carry an insurance for their owner operators that requires a minimum of 2yrs CDL experience. And if you're going under your own authority then you come across the same hurdle in that you will have to find an insurance that will cost you $10k-$13k/yr, and that is IF an insurance that will cover you even exists in your state. So if you are going under your own authority then start quoting rates now (and try to get A-rated insurers so brokers won't turn you down), and if you wanna work as a leased operator then start talking to potential employers now. BEFORE YOU BUY YOUR TRUCK!

The next hurdle will be financing. Many lenders are taking the same route of 2+ yrs experience. In the last 5 years most losses that lenders have incurred have been from first time operators, not from the big companies. So they are now very strict. Your options will be limited and your interest rates could be as high as 28% unless you do A LOT of legwork. So if you plan on financing a truck or financing your own trailer to run under your own authority, then start making those calls now.

Do not buy a new truck as your first truck. They are overpriced, overrated, and it is much better to own a truck flat out and not have to worry about the monthly payments while you are learning how to make money on your own. Do not "borrow" from your 401k, either withdraw it completely and pay the taxes on it or leave it alone.

There are the many compliance costs involved that Hanadarko pointed out above but I am going to assume that you have the cash available to take care of those. But if you are going with your own authority (which gives you the most flexibility but hardest learning curve) then you can expect to pay in Cash about $4,500-$5,000 in IRP/IFTA/MC/HVUT/UCR/INSURANCE before your truck ever meets the streets. And that's not counting inspections and other administrative compliance requirements for the New Entrant Program that every new carrier gets put into (and expect to get pulled over at the scales regularly too while you are in this program).

As far as expected costs, imagine a cost/mile of approx .75-.85/mile not counting driver pay or equipment purchase which can vary depending on your choice. Gas alone should be around .55-.60/mile.

I cannot stress this enough...Start doing your homework and getting actual quotes and establishing contracts BEFORE you purchase anything at all. Otherwise you will be running like a madman learning as you go. I was thrown into this type of situation, so if you want me to share with you some of the stuff I've learned feel free to send me a PM. For actual road experience stuff you can ask the veterans on this site, but I can give you some insight into the starting process that I have suffered through by forced learning. Don't let anybody take away the dream from you. If you wanna do it, you CAN! But it's definitely not easy. And with your own truck you will have to respect the road and your industry much more than ever.

 

I got to comment on this...When I went looking for my rig, I wanted to try and pay 50% cash and finance 50%. I figured that would look attractive to any lending place that dealers might use..and I could get a newer rig than just paying 100% cash for an older one.

WRONG!

It got weirder.

I have been working full time for 13yrs at the same employer and my credit score is in the high 700s. I figured that this would make it easier for me to obtain a loan, especially with NO other debt and paid off car loans.

WRONG!

The banks/dealers told me that unless I could show a contract/lease they wouldn't even consider me for financing. I was amazed. I figured since I was working FULL TIME and making decent money (and all things considered) that I would be LESS of a risk to a bank, than an O/O starting out.

WRONG!

One dealer actually told me to tap into my Home Equity and put my house up for this purchase. Are you ####ing kidding me?
(my home is almost paid off...)

WRONG!

...so I said hell with them and looked for a private sale. Within 30 days I found this rig in MN and paid cold hard cash for it. Case closed.
I own it. No monthly note. No bank can take it away from me. Ever. Even if I don't run and let it sit in the driveway..

PS. DONT ####ING TOUCH YOUR 401K unless your looking at eviction and being homeless and NO other options exisit.
Other than that, it needs to be considered OFF LIMITS. Don't count on Social Security and it could prove to be difficult to create your
IRA when your starting out and each year you don't contribute you loose out in the end. My 401k has been decimated 3x since I have had it.
Totally wiped out over and over again....but I forge ahead with it anyways...

 

You must remember that 26cpm is not what it is costing your employer. With payroll loading (mental-dedical, employment taxes, WC, vacation pay etc.) their cost is in the 34cpm range, close to what Redd is paying himself.

 

You won't have to pay that 20% if you roll it over to a IRA account and the
other 10% can be paid at tax time. You don't really pay a 10% fee, the amount you withdraw is actually added to your income for that year, which increases your income for that year, and that is what raises your taxes.

My advice is to go for it

I'm doing the same thing as we speak. NO OVERHEAD NO OVERHEAD NO OVERHEAD!!!!!!!!!!!!!

 

He said he would cash out his 401k, not roll it over. Therefore he will incur a 20% penalty. If you, or anyone else ,wants to use a 401k to finance their adventure into being an o/o, it's your money, have at it. I was only pointing out the downside of making such a decision.