Taking the plunge. My journey as an O/O.

Discussion in 'Ask An Owner Operator' started by Farmerbob1, Jan 7, 2019.

  1. Farmerbob1

    Farmerbob1 Road Train Member

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    I have decided to stop staring at the water, and jump in. Today, I turned in my Crete/Shaffer truck at the Lenoir City terminal so they could convert it into an O/O truck.

    2016 Freightliner. 443k miles. The last 250k of those miles are miles I put on the truck.

    The price of the truck and an additional 2 years/200k miles warrantee which will activate at 500k miles is 68,750, but I am getting a discount of 5 cents per mile over 400k, so the actual total is around 66,500.

    I will be putting 12k down, and getting a 55k loan at 7% for 36 months.

    My payment will be about $400 per week. They need to re calculate the loan based on the miles I drove since the last time they ran the numbers.

    I wanted an automatic for fuel economy. I also wanted a truck with a better desk than the one in my current truck. However there was something else I wanted more. A truck that I was confident had no immediate or hidden severe issues. The only way to reliably know this would be for me to buy my company truck, or buy new. I am not jumping into a new truck as my first truck.

    My truck has had it's issues, but those issues have always been fairly simple fixes. A relay here. A replacement wiring harness component there. A starter and an alternator. A radiator hose leak. Recently, there was a transmission slave cylinder leak (and a clutch brake issue directly related to it), and a computer mainboard corrosion issue. All of these issues were addressed.

    She's a solid truck, even if she's not what I want.

    Next: Exit Strategy.
     
  2. homeskillet

    homeskillet Road Train Member

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    Seriously, best of luck to ya.

    At least you're familiar with the truck.
     
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  3. Scooter Jones

    Scooter Jones Road Train Member

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    No turning back ;-)

    You're in for a whole new adventure.

    Best wishes to you!
     
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  4. Farmerbob1

    Farmerbob1 Road Train Member

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    The particular flavor of O/O that I have chosen is to drive under the authority of Crete/Shaffer, rather than my own authority. This reduces both my costs, and my potential income. I recognize this.

    More worrisome, and the reason for this second post, is that by becoming an O/O, I am taking on risks.

    I have an exit strategy. It is very simple. I must match my quarterly personal income as a company driver within a year in order to remain an owner operator.

    This will be based on my quarterly tax reporting. The first couple quarters will likely be stumbling bocks as I learn, but by the end of the first year as an O/O, if I am not taking home as much per quarter as I did as a company driver, then I will sell the truck and go back to being a company driver.

    The only exception to this would be if the difficulty is a single major event, like major engine or transmission service. I will not count a quarter if it includes a major repair.

    I will, however, limit myself to 'not counting' only one quarter.

    My gross income this last year with Crete was 66k. That means I need to make 16,500 per quarter AFTER truck expenses (but before taxes) in order to match my company pay.

    If I cannot do that by the 4th quarter without major expenses, or the fifth quarter if I have a quarter with a major expense, then I sell the truck and go back to being a company driver.

    There is a second stage to this exit strategy. If I am not making 20k per quarter AFTER truck expenses but before taxes by the end of the second year, then I will also get out. I do not want the extra risks without some extra income.
     
  5. Scooter Jones

    Scooter Jones Road Train Member

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    Well, you already have 2 exit strategies in place?

    You really haven't (in my opinion) taken the plunge. It's more like putting your feet in the water.

    But like I said, I wish you well!
     
  6. snowwy

    snowwy Road Train Member

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    Goals would be easily accomplished working for a better oo company where they pay much better. Landstar for instance.
     
  7. Tombstone69

    Tombstone69 Road Train Member

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    If your worried about major engine failure before your next oil change get the oil tested.You've put 250k on the truck,so like the other hand said you're familiar.,just keep up the PM,what is it,a pound of prevention will keep you from going broke,keep records.Good luck and happy travels.
     
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  8. JonJon78

    JonJon78 Road Train Member

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    How much is crete paying you as O/O is it mileage based?
     
  9. Kla8468

    Kla8468 Bobtail Member

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    You need to make sure you have a good accountant--one that understands the trucking industry. Also, you touched on your exit strategy r/t after truck expense but before tax income. You need to sit down with your CPA, wife or partner if you have one and figure out your household monthly income needs. You want to keep your personal income as low as you can while still meeting your obligations. Keep as much of your income on the business side. You'll be amazed at the everyday things you buy for your home that will now become business right offs and this is where your cpa will come in handy. Keep receipts for Everything! Let the CPA figure out if they're allowable, that's their job. Your job is to keep records, especially the first year or two. Don't be surprised if you get audited by the IRS in the first year or so because your annual gross income will, or should, increase significantly and this throws a red flag for them. This is also where the competent CPA comes in handy. Take care of your equipment. Don't put repairs off. Keep your money in the bank for rainy days because son there will be plenty of them. Take care and good luck. Been at this 30 years and wouldn't change a thing.
     
  10. snowwy

    snowwy Road Train Member

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    I don't know about the red flags. But I do know they're lazy and like to keep things out of the equation.

    They tried to hit me up for $70G. And I started getting all kinds of mail for lawyers that claimed they could get me down to 10% of the bill. Now I sit and wait for the gooberment to open back up so I can get my $2500 refund in the mail. CPA did a good job of getting my $70G owing turned in to a refund. Course, if it wasn't for per diem. It probably would have been a zero balance.
     
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