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

Well, I have put a lot of money onto the truck. It has a new One-box, a rebuilt engine, a new clutch, and several other new bits and bobs.

With all that money in the truck, I will keep it a couple years, I think.

As for the APU, I need to see what is available these days. I don't want to make a decision for next year based on last years models.

 

When you decide to buy a new truck does the APU come off this one? You won’t get any money extra for it.

 

That's the plan right now.

 

Well,

Finally got a look at the 2018 and 2019 tax documents.

2018 Adjusted Gross Income = 62,758
2019 AGI = 15,958

Now, at first glance, I am sure lots of folks who don't know how tax deductions work are going to make all sorts of "I told you so" statements.

Please don't, until you read the rest.

In 2019, deductible meals and travel totaled a bit over 19k. In 2018 I got no deduction for those things.

In 2019, I paid 22k in truck payments, while in 2018, I paid no truck payments.

In 2019, I spent a touch less than 3k on truck electronics and cellphones + data + subscriptions. Etc. In 2018 none of my purchases of that sort counted towards reducing my income.

So, IMHO, the real comparison is this.

2018 company driver : 62,758 taxable income.

2019 o/o : 37,958 income (AGI + food/travel + electronics)

After the truck note is paid, my yearly income will increase by 22k, so this year would have been 59,958 without the cost of the truck note.

The truck note is an investment.

More things to consider:

I lost 33 days driving time in 2019 due to an engine rebuild. That cost me roughly 14k in income.

The shop costs of that 13k service will be forwarded to the 2020 tax year because it was paid in 2020.

My maintenance costs in 2019 were a bit over 30k, NOT including the 13k shop fees that are forwarding to 2020.

My fuel costs in 2019 were a bit under 50k. My miles driven in 2019 were a bit over 124k.

My fuel cost per mile was 40cpm.
My maintenance cost per mile was 24cpm strictly by 2019 taxes, or 35cpm based on the costs incurred in 2019 but paid in 2020.

 

More numbers.

My business income was 160k gross.

My miles driven were 124k

My gross income was $1.29 per mile.

My income after fuel and repairs, but before other costs, was 65cpm without counting the cost of the year-end engine rebuild, or the truck payment.

If the engine rebuild cost is plugged into last year's data, that changes to 54cpm, again, only considering fuel and repairs, not the truck payment.

The first year of the business was a learning experience, but it didn't knock me down, and my income numbers are acceptable to me in the short term until the truck note is paid.

 

When is the truck paid off...?

P.S. I don’t believe in the numbers change that much with a paid off truck because you need to save for a replacement....

 

Agreed. Also, the old truck will keep sucking up maintenance money. You would think finally it would stop, but it doesn’t.

As you know, you have a revenue problem. Also, a money hungry truck.

Still happy for you though. You had a plan and following it.

 

Since the comparison is O/O vs. Company pay. Gross Co. pay being 62,758. The only way to honestly compare, is to add up take home pay, plus any income tax refund, as a Company Driver, Against the O/O gross,160-50-22-43=45. As it is, you took home $45k, or $58k, and are carrying $13k debt into this year. Either way, Minus any extra health ins. Plates/Permits, fuel taxes,2290,Ucr, anything extra you paid, or were charged back for, any income taxes paid, as an O/O. the value of the Truck, if you were to sell it, right now. It’s hard to compare, since taxes and deductions are so different,the only way I’ve found is to literally add up how much I paid myself, after overhead. Then look at an asset/ liability list of debt, vs. the value of my equipment. Essentially, what’s “The Company” worth, usually not much.

 

If I do not pay the truck off early, it will be paid off in January of 2022. I will almost certainly be paying it off early.

Sure, I will need to save for a down payment on a new truck, but I will have the old truck as a trade in, and I can put away about 10k every 6 months if I don't have another engine rebuild to suck away 33 days of income and 13k+ of money.

 

I certainly expect the truck to keep sucking money. It certainly wasn't cheap last year. I figure 30k a year for maintenance is a reasonable estimate, or even a high estimate.

I am actually not following the original plan. The original plan was for me to have the truck paid off by now, and be driving for a company with a load board.

The original plan encountered reality and went *poof* so I am still paying for the truck. I am pushing everything else back too.