I don't need to adjust my numbers to fit anything. In fact, I usually don't discuss my personal numbers. My decisions are strictly made for what is best for my business. There are some who use reducing their tax rate as an excuse to buy new equipment. While that can work, there are other ways in which to reduce taxes and have more in assets, such as buying real estate, 401k or retirement program. There are a number of tax shelters that don't depreciate. Buying a truck or any equipment is not a good investment. It depreciates. A good investment appreciates in value. My problem with buying new equipment, especially starting out is the added pressure you place on yourself without knowing what you are doing. Learning any business takes time. Unless you have owned trucks and ran them you don't know what you are getting yourself into yet. All equipment will eventually need to be replaced. When you buy equipment you are just sending money to the bank rather than the IRS. Equipment depreciates quickly, especially when new. I would rather invest the money in something that will generate a return at some point. Equipment will never be worth more than it was when new. I am not saying that one should never buy new equipment, but starting out with new is not a good business decision when you have limited experience, limited credit and limited cash. Those payments go on whether the truck is moving or not. Most people who have big truck payments cannot afford to take a few days off because they can't afford to lose any revenue. There has been some discussion about people with paid off equipment hauling cheap freight. I would wager that you could find more with new or newer equipment who are willing to haul cheap freight than someone like me who has their equipment paid off. I can afford to sit to get a good paying load. Those who have the big equipment payments feel that they cannot afford to sit because they are living from paycheck to paycheck and running for cheap rates so that they can make their truck payments. I have lost count the times I have seen this happen. I was looking at some trucks the other day and they had an entire lot filled with repo trucks. These were not ragged out old trucks, but newer trucks. All these people are doing is buying fuel and making truck payments. Some have wives at home with good jobs who pay the bills so that they can live their dream of owing a new "big rig." If you buy a new truck and can't pay your bills, then something is wrong.

While I agree than some brokers are taking advantage of the current economic situation, they could not take advantage of people who were not willing to go along with the cheap rates. Rates are low primarily due to owners taking them. They don't demand higher rates so they don't get them. Rates are lower than a few months ago, but I won't move my trucks below a certain rate. If I don't get it then the truck either sits or I deadhead to a better area. I don't take the $1/mile load to get to a better area. I either get a decent rate, sit or deadhead.

 

 

Ah it was you that bought the real estate; I couldn't remember who it was. In Alabama yet too. Not bad. Smart move. I congratulate you.

 

Sorry to have taken your line, heavyhaulerss. :wink: I think your grandparents did a good job raising you. They seemed to have instilled good values in you. Rather than paying $1,600/month for a depreciating asset like a truck, you could buy a truck with a $500/month payment and take the difference and buy real estate or some other type of investment which increases in value. You sacrifice in the short term to benefit long term. Actually, I don't think it is a sacrifice to have a smaller truck payment, but an advantage.

 

You guys convinced me to get an older truck to start out with. I found another 84 peterbilt daycab 359 with a rebuilt detroit 8v92, 13 speed. I'm going to try to go look at it on Monday. Its been sitting for 3 years, but he told me he drives it around the shop to keep everything lubricated. So hopefully it'll be a keeper!

I hate to say it but, $300 dollars a month compared to $1600 a month sound really good. :roll:

 

even if it never moved an inch for three years
he's going to tell you he drove it around
don't go near that truck
the fact you would even go near a "92"
means you need to do more home work
that is one big time obsolete engine
with an insane appetite for diesel
way too old
stay in the 1999 and up range

 

That is a pretty old truck. If you decide to go with it, I would make sure to check it out thoroughly. 3 years is a long time for a truck to sit up. I think you may be better off with something newer. If you decide to go forward with the truck you may want to take it to a garage and have them check it over for you. Some things to check are suspension, steering (tie rods, drag link, king pins, steering gear box), transmission, rears, engine, 5th wheel, a/c, charging system. Another thing would be all your air lines and hoses and wiring on an older truck. It could be a real jewel. You may also want to get papers on any work that has been done. You can find some good deals on trucks in the mid to late 90's that may be more fuel efficient. Those old Detroit engines are really tough. The first truck I owned had a 238 Detroit.

 

Let's say you are thinking of starting a shop that makes some machine parts ... and you need this big machine to churn out your widgets. The machine in question is notorious for losing its value almost completely in 5 years. So, the first thing you decide to do is to LEASE and not to buy because 1) you don't want to invest your money into a depreciating asset; 2) the payments are smaller with leasing; 3) the entire monthly payment is 100% tax write-off; 4) you get full maintenance and can concentrate on improving your widgets and service and sales; 5) you can simply return the machine back to the dealer after the term is over. You also decide to lease NEW because the interest is lower and because you don't want the headaches of inevitable repairs associated with used equipment. When your friend who starts a similar business in another city says he can improve his bottomline buy BUYING A CHEAP USED machine you counter that you can make the same amount of money by finding more profitable markets/niches for your widgets. When you meet 6 months later, your friend has spent the same amount of money on his used machine (low monthly payments plus high repair costs) while you had everything taken care of by the dealer (full maintenance lease). Because your NEW machine worked non-stop and broke down only a couple of times, you were able to find a high-paying customer and you ended up making MORE money than your traditionally thinking friend.

Substitute the "machine" with a "truck" and you get my point

 

Whether you lease or buy a truck you are investing your money in a depreciating asset. The difference is that you have something to show for your investment when it is paid off. When you lease you have nothing but a write off. You pay for the machine for whom ever owns it. I would not want to lease equipment that I could not own at some point. There are certainly times when leasing makes sense. I don't think it makes much sense for most small operators.