New owner operator, Lease or Own authority?

I used credit. I didn't pay for a 62k truck with cash. Financed 54k.

 

I also financed my 78k truck some 2 years ago, and this year I financed a 68k new reefer trailer. Only my truck has been paid off, but hopefully I can pay off my trailer next year. Personally, this is the only loan I have and one credit card that I just use to keep it from closing itself. I will never return to having multiple loans, credit cards, etc. It really does hurt you down the road. I am so glad I got out of that mess. Thanks to trucking, and I guess my hard work too.

 

I use the credit cards, but I pay them off quickly. I had to put a new PTO shaft on the truck 680 bucks. I traveled over Thanksgiving , maybe another 800. Paid off 1800 on the card. Now it's $11, which was gas for my car.

I do count the cards as a way to repair things. I really never try to go under 20k in cash on hand. I have 33 k in cash. I still owe 13.5 on the truck, I have the title. It will be two years in March for the truck. I know I will owe for taxes, then I will work off the last 13.5 k on the truck.

I look at borrowed money as flexibility with a cost. 13.5k will cost me 1500ish to hold open for a year, so I do want to pay it off.

 

Good idea keeping a credit card open even if you don’t use it. Some years ago my wife and I decided to cut all of ours up. We also lived in a small 80,000 dollar house that we bought 13 yrs ago. All paid for. Our equipment we had transitioned over to being on the businesses credit instead of our own over time.

Well, our credit scores were 805 and 820 at that time but what I didn’t realize was these last 3 yrs our credit got hurt because we essentially had no credit. So this year we go to buy a larger house to suit our growing family and the lender is like... ummmmm.... you guys show no credit score. We’re like WTF!? So embarrassingly we had to ask my wife’s Dad to be co-users or authorized users on his credit card. lol. Also had to finance my old 02 Ford that way our credit would get restored which it did after some months.

Crazy eh?

 

I totally get it. I could use cash on hand to pay down debt by quite a bit but psychologically I just can’t do it because then my account would be lower and mentally I’d be more stressed. You could say well your line of credit is zero so what’s the worry if you end up needing cash? Well, yes they would be right but I just can’t bring myself to potentially get in a jam. What if that 100k line got used up fast and the bank didn’t want to refinance my equity I had paid off in my equipment? I’d be potentially screwed. Old habits die hard I guess.

Banks are not your friend even though they may act like it. They exist purely to make money off you.

 

Most of the failed or failing lease ops I’ve spoken with, boxed themselves in by refusing to follow the money. Electing to try and continue their plan to be home every weekend. Hoping their chosen lane would recover. It probably did, about 3 days after they returned the truck.

Seasonal lanes are just that, seasonal.

That alone tells me they weren’t truly interested in owning a truck. They just wanted to plan their own hometime.

There are better ways.

 

This right there is the truth.

Credit is a tool for you to use properly, especially if you want to run a business. It's funny because if you make good credit decisions, it liberates you. If you make bad credit decisions, it constrains you..

 

There’s a metric to succeeding as an owner operator , including revenue to the truck , seasonal lanes and time spent working , I believe the standard is over 300 days a year a one truck operator typically must operate to more than break even . I think a lot of real operators are offended by any comparison to lease operators holding a steering wheel and counting mpg

 

This is what I do too. I started my authority with 8 thousand cash and 30k in credit cards. Bought a used truck and trailer with title in hand and I have about 12k in credit cards. I have about 20k on hand now but I still pay off my cards at my own pace because I would rather have the cash in hand then have to depend on the cards if something major were to happen.

 

Cast is King