income

Discussion in 'Ask An Owner Operator' started by title12, Nov 7, 2007.

  1. title12

    title12 Bobtail Member

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    Oct 31, 2007
    minneapolis, minnesota
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    it sounds like you o/o are making around 95k a year on average, but is that really the case? what would you guess would be the average income after fuel costs and so on?

    also, how did you buy your trucks,(ex. new, used?) and how much did they cost and how did you pay for them?
     
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  3. title12

    title12 Bobtail Member

    33
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    Oct 31, 2007
    minneapolis, minnesota
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    can anyone help me out w/ this question?
     
  4. pathfinder

    pathfinder Medium Load Member

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    Aug 25, 2007
    central,MN
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    Don't worry, you'll get some good info. here, you just may have to wait a little bit, but it will come! A little patience now will save you considerable headaches latter. You will be armed with good advice and make your own informed decision.
     
  5. Roadhound

    Roadhound Light Load Member

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    Jan 31, 2007
    Tennessee
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    After all is said and done, my annual income is around $45 to $50,000 a year. That is after fuel, truck and trailer payments, maintenance, insurance, the whole nine yards. I bought my truck and trailer new last year. I always try to keep a new trailer, but decided to buy a new truck because I had rather make a higher payment and have a lot of warranty than have to work on it all the time.


    I think I do pretty well, I mean after all, I am not trying to be rich, I am just trying to make a decent living and feel I am doing so. Besides, I can't think of anything else I'd rather be doing. I hope this kinda helped answer your question.
     
  6. jlkklj777

    jlkklj777 20 Year Truckload Veteran

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    Oct 1, 2007
    Duncannon, Pa
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    An average truck driver will run about 130,000 miles per year. He will be compensated for around 120,000 to 125,000 of those miles. The going rate is around .90 cpm with a .25 cpm fuel surcharge for a total of $1.15 per mile. An average truck will get around 6 miles per gallon. An average truck will idle 8 hours per day (while the driver is sleeping and using heat/a/c for 6 months out of the year the other 6 months will be seasonable enough to idle much less or not at all). An average driver will be on the road 5.5 days per week for 50 weeks for a total of 275 days on the road. An average gallon of diesel fuel is around 3.35 per gallon. An average lease payment on a truck will be around 450 per week. An average maintenance fund will take about .08 cpm.

    125k milesx $1.15 = $143,750.00 (revenue to truck mileage only)

    130k miles divide by 6 mpg = 21,666.666 of diesel fuel x $3.35 per gal = $72,583.331

    6 months of idling (365 days dived by 2 = 182.5 days x 8 hrs of idle time per day = 1,460 engine hours x .75 gallon per hour = 1,095 gallons of fuel x $3.35 per gallon = $3,668.25.

    Total fuel cost for 1 truck for 1 year at above parameters = $76,251.581
    Lease payment on truck for 1 full year $450.00 x 52 weeks = $23,400.00
    Maintenance fund 125k miles x .08 cpm = $10,000.00

    Total expenses for top 3 = $109,651.58
    Truck revenue for mileage = $143,750.00
    Adjusted gross earnings =$34,098.42

    Then there are other added charges to an o/o or lease operator such as trailer rental fees, qualcomm fees, trip pak fees, use of the company fuel card fees, preload fees, drop fees etc,

    These fees are usually hidden within the language of a lease contract and may cost several thousand dollars per year.

    Then there is road use taxes to calculate and fuel taxes to compute

    Now lets not forget the insurance end of this either; such as bobtail insurance, liability insurance, medical insurance, workers comp insurance, and disability insurance.

    The insurances could run up to an additional $10,000.00 per year for full coverage in all areas (possibly more).

    Now you still have your social security, medicare, Federal tax, State tax, and maybe local taxes.

    So in conclusion you wind up with about $24,098.42
    Now you have to pay your taxes. (which are due quarterly) 12.4 % for social security and 2.9% for medicare for a total of 15.3% = $3,687.06

    For an adjusted income of $20,411.36

    For a single filer on your federal tax, rate will be 10% on the first $15,650 = $1565.00 plus 15% (on the money earned above 15650)x 4,761.36 = $714.20 total fed tax =$2279.2

    Adjusted earnings before state tax is $18,132.16.

    I think thats far enough to give you a good picture of what an o/o lease operator will face. But look on the bright side of things if you live in your truck there wont be any mortgage due or utility bills and you will probably qualify for the earned income credit! (you'll need it!)
     
  7. Eskimo6804

    Eskimo6804 Heavy Load Member

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    Jun 13, 2007
    Northeast Alabama
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    You sound like a lifelong company driver who tried to be an owner operator once and failed miserably. Your "average" numbers are way off on several items and besides that, no two operations are the same.

    I'm not going to sit here and waste my time arguing with you. I will just leave you this thought; If an "average" o/o only made 20k per year profit, Why would ANYONE become or remain an owner/operator? Just ask all of the other owner ops on this forum if they only make 20k per year and see what they tell you.(That is after they stop laughing long enough to be able to speak.)
     
  8. Eskimo6804

    Eskimo6804 Heavy Load Member

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    Jun 13, 2007
    Northeast Alabama
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    To answer your question on income; the 95k average is a bit high. There are some very business savvy and experienced o/o that make that kind of money, but they are few and far between. I would estimate the average to be somewhere near the 50-55k range. You can expect to probably make a bit less starting out while you learn a few things. On the flipside of the coin, once you gain experience, knowledge, financial discipline, and a decent business accumen, you have the potential to make significantly more than the previously stated averages.
     
  9. title12

    title12 Bobtail Member

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    Oct 31, 2007
    minneapolis, minnesota
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    so what do the good o/o do to get the extra money?
     
  10. Burky

    Burky Road Train Member

    They find a profitable niche to work in. They don't try to compete head to head with Swift of JB Hunt with one truck.

    They manage their costs well. Jlk 77's numbers show 3600 a year for idle cost, yet the industry estimates an annual cost of about 1800 for idling. They don't idle if they don't need to.

    They manage their own maintenance and do as much of it as they can themselves.

    They provide a higher level of personalized service than the big companies do, and they make it a point ot know their customers one on one.

    They meet their commitments. If they sign on to deliver at 8 am, they are there at 8 am, ready to make the delivery. They build trust with the people that hire them.

    In short, the successful ones do all the same type of things that the successful Dairy Queen franchisee does, they just do it in a truck. They are businessmen who own a truck, not truckers who just happen to find themselves in business.
     
  11. jlkklj777

    jlkklj777 20 Year Truckload Veteran

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    Oct 1, 2007
    Duncannon, Pa
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    So happy you decided not to challenge my numbers Eskimo. It would truly be a challenge to disprove them.
    Yes I did in fact venture down the lease operator path and got burned very badly financially. I learned my lesson very well and the numbers I used are in fact real world figures.

    The current diesel cost average across the US is (as of 11/05/07) $3.30 per gallon at the pump. Lowest is $3.21 in the gulf coast area and highest is California at $3.52 per gallon. This info can be verified by checking the EIA website (energy information administration).

    As a company driver I work 5.5 days per week and average around 2800 miles per week per year. As a lease operator I worked 6.5 days per week and averaged closer to 3200 miles per week. Most companies will range between 2000 miles per week to 3500 miles per week. I believe 2500 miles per week was a reasonable representation.

    As for fuel averages; the very best (I have seen and heard of) is around 7.5 mpg and the very worst is around 4.5 mpg. Again I used a reasonable figure of 6 mpg.

    As for idle time again this is based on real world calculations. Most drivers do in fact still idle their trucks and to claim an average idle time of 4 hours per work day over the course of a calendar year was very reasonable.

    The maintenance fund is a customary fund established and written into most lease contracts to alleviate the burden of costly repairs when you least expect it. $10,000.00 for a maintenance account is reasonable and prudent.

    As for the averages for insurances this does vary but medical insurance can cost 500 to 600 per month for family coverage (I know due to a 3 month disability stint I had over the summer and the cobra work sheets showed my blue cross blue shield insurance would cost me $550.00 per month to keep it active). As for the bobtail insurance, unladen insurance, non trucking liabilty, and physical damage insurance rates you may check the OOIDA website for some "real figures." Workers comp is the independant contractors responsibilty as well.

    As for the actual taxes I listed they are in fact true as well you may research this section in the IRS.gov website.

    So to recap my figures are indeed plausible.

    Now lets consider why you would dispute this; Owner operators do not like to tell how much money they in fact do make AFTER their expenses, deductions, depreciations, etc. Many o/o's get into this to STOP paying taxes through claiming poverty. Now wether this is due to alimony payments, child support payments, or just a general dislike of paying taxes is for each o/o to answer for himself. Many o/o's will elect not to have some of these coverages to save money (very shortsited and potentially deadly to your aspirations of being a successful o/o).

    You can reduce some of the operating expenses associated with being an o/o through the following;
    1. Buy a truck privately through a dealership with a hefty downpayment to secure the lowest interest rate possible.
    2. Get an apu installed to limit your idle time.
    3. Take advantage of group discounts through your carrier or OOIDA for your insurance needs.
    4. When buying a truck buy an aerodynamic truck. Smart business owners will save thousands in fuel costs alone.
    5. Hire a reputable CPA that specializes in truck driver tax returns and listen to him.
     
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