[A Smalltown Rube]

Originally Posted by LOAD IT

You also need to talk with your accountant about depreciating the truck each year, this will also get you some tax savings. Buying a new truck frequently may work for you. It does for some, you have to crunch the numbers and see.

I asked my CPA about this years ago. She said the best long term plan is to take accelerated depreciation and run the truck for as many years as possible.What many truckers don't realize is that when you buy a new truck, you have to pay capital gains tax on the trade-in value of your old truck. So if you trade in your truck every 3 years after it is fully depreciated, you pay more in taxes than if you just kept your old truck. I've had my Pete for 10 years, shooting for another 10.

[-FlyByNight-]

It's good to see there are so many Dave Ramsey fans here.

[GMAN]

Originally Posted by BanditsCousin

But, Gman, how else are we to keep up with the Jones' and buy 200 dollar sneakers, Ipods, and BMW's on a $19,000/yr salary????

You make a good point. And the cost of credit is actually passed onto those who pay their bills on time, in addition to the fees you mentioned as well. Do you think the interest I pay on anything is influenced by my credit rating? Yes and no. It also depends on all the idiots that bought Hummers, jewlery, every video game console (and games), etc that went belly up. The credit card and finance companies are going to recoup it somehow, and who else better to collect from than people trying to keep their credit up, live within their means,
and pay on time?

I'm still no better, I paid for my truck via finance However, I've never paid a minimum payment amount on it once. That "minimum payment due" is a trap too many people fall into so they can spend more money on things they don't need and the cycle continues!

If more of us paid cash for most of what we buy prices would likely come down. We could get by on much less income than we do currently. Much of what we earn goes to pay interest on things that we bought that we could not afford. I doubt that most of us consider that we cannot afford to buy something if we pay with plastic. It isn't something that would occur to most of us. Each time we use plastic, whether debit or credit banks receive a percentage of what we spend. That is added to the purchase price in one way or another. Rates tend to be from 2-5% for most bank cards. American Express charges the highest rate. I wonder what we would be paying for cars if we went back to paying cash? I paid $175 cash for my first car. And it was a good car. You could buy a good car for $100 back then. Imagine that?!! People still financed new or newer cars but many did pay cash. You could buy a new Volkswagon for about $895-1,200 as I recall. Prices went up to about $1,600 and shortly thereafter they stopped making them available in the U.S. I am talking about the Beetle. It was one of the most fun cars you could drive back then. It was a no frills, no air straight shift car with independent suspension that would go about anywhere. You could buy a new Plymouth or Dodge between $2,200-3,600 new. Ahhh, the good old days. If you did finance a car the term could run from 12-30 months. As prices went up interest rates escalated and terms extended out. It isn't uncommon for some to pay for 6 or 7 years on a car that may never be paid off.

We pay a high cost for living beyond our means. I would say most of us do this to one extent or another. As I recall prices didn't go up dramatically from one year to another until we started to use so much credit. We are addicted to it. Banks loaned money on their own deposits rather than borrowing from larger banks or the Federal Reserve. It was rare for a bank to fail back then. They didn't use credit scores. In fact, scores did not exist. Banks loaned money to those whom they knew. We got to know our banker and they got to know us. They could do that since banks were much smaller and more like community banks. Decisions were made locally. If the banker didn't think that you could afford the loan then he would not give you the money.

Today you can go to most any major college campus during registration and you will find several banks pushing credit cards. I think it would be better if we got rid of our debit and credit cards and started paying with cash. There is something about having to dig in our pocket and count out cash. I have been as guilty as any using a debit or credit card. I mostly use a debit card, especially when I am traveling. It is easy and I don't have to carry large sums of cash with me. I think that the convenience has spoiled us. Perhaps carrying large sums of cash would be much better.

[heavyhaulerss]

O.K. I have to jump back in here... my perspective on the investments, in particular rental property, or real estate. I was asked by my 19 year old daughter a year ago, why did I buy so many properties? it was not about earnings, or even making money. it was that, but, more so to keep from spending money. I gave my daughter this example... say you have $4,000 in cash & are working making very good money. now you take that 4 grand & put it down on a house, & make the payments, ins, mortgage, taxes, repairs, e.t.c. now say 3 years into your 10 year mortgage,all your friends invite you to go on vacation with them, but it will cost $ 1500-2500. if you have the cash on hand, it would be very tempting to say, I have the money . I want to go. or maybe you convince yourself you need a new car. you deserve one. you work hard, saved your money. you can take the 4 grand & buy the new car you always wanted. I tell her now... you would not sell your rental property to go on vacation would you ? NO! you would not sell your rental property to buy a new car would you ? NO! I said that's my point. it ties up your money, so you don't have a lot extra to waste & regret later. if you have a few hundred going into secure investments that appreciate, you will have less to go for other things that temp us & get us into debt & have nothing to show for it. the way I look at it


if I added up the total amount of money I spent on all the real estate & took that total & asked how much of this money would I have if I bought not 1 piece of real estate, but kept the money ? my honest answer is probably somewhere around 40 % to 50 % at the most. because I would of talked my self into buying so many things. when you have a good week in trucking & take home 3 grand. you can find something you really needed & now you gotta have it, cause you got the money. so you think.... as soon as I started taking in more money than I ever made in my life, & that was with trucking. the first thing I thought was... I have to do something with these huge checks coming in & I did not want to be able to get easy access to it. THERE IT IS.. that's what I mean to sum it up.. I put my money where there is not easy access to it.

[GMAN]

That is an interesting way to look at it, heavyhaulerss. That would be a good way to keep more of what you earn. It also puts your money to work for you. At some point you can retire and either live off the income or sell your property and live off the sales price.

[matcat]

Originally Posted by heavyhaulerss

O.K. I have to jump back in here... my perspective on the investments, in particular rental property, or real estate. I was asked by my 19 year old daughter a year ago, why did I buy so many properties? it was not about earnings, or even making money. it was that, but, more so to keep from spending money. I gave my daughter this example... say you have $4,000 in cash & are working making very good money. now you take that 4 grand & put it down on a house, & make the payments, ins, mortgage, taxes, repairs, e.t.c. now say 3 years into your 10 year mortgage,all your friends invite you to go on vacation with them, but it will cost $ 1500-2500. if you have the cash on hand, it would be very tempting to say, I have the money . I want to go. or maybe you convince yourself you need a new car. you deserve one. you work hard, saved your money. you can take the 4 grand & buy the new car you always wanted. I tell her now... you would not sell your rental property to go on vacation would you ? NO! you would not sell your rental property to buy a new car would you ? NO! I said that's my point. it ties up your money, so you don't have a lot extra to waste & regret later. if you have a few hundred going into secure investments that appreciate, you will have less to go for other things that temp us & get us into debt & have nothing to show for it. the way I look at it


if I added up the total amount of money I spent on all the real estate & took that total & asked how much of this money would I have if I bought not 1 piece of real estate, but kept the money ? my honest answer is probably somewhere around 40 % to 50 % at the most. because I would of talked my self into buying so many things. when you have a good week in trucking & take home 3 grand. you can find something you really needed & now you gotta have it, cause you got the money. so you think.... as soon as I started taking in more money than I ever made in my life, & that was with trucking. the first thing I thought was... I have to do something with these huge checks coming in & I did not want to be able to get easy access to it. THERE IT IS.. that's what I mean to sum it up.. I put my money where there is not easy access to it.

That is a VERY good point... I need to find something similar on a much smaller scale When I have extra money my mind drifts into things like, "Oo now I can afford that" "big cb radio", "computer", "some toy", "new wardrobe", and so on. I have tried doing the savings account thing, but as soon as some expense comes up, or some toy I really want pops up, it is too easy to go online and hit that transfer button.

I certainly don't have the credit or make enough to go plopping down money on real estate though, wish I could find something else to tie my money into.

[heavyhaulerss]

Originally Posted by matcat

That is a VERY good point... I need to find something similar on a much smaller scale When I have extra money my mind drifts into things like, "Oo now I can afford that" "big cb radio", "computer", "some toy", "new wardrobe", and so on. I have tried doing the savings account thing, but as soon as some expense comes up, or some toy I really want pops up, it is too easy to go online and hit that transfer button.

I certainly don't have the credit or make enough to go plopping down money on real estate though, wish I could find something else to tie my money into.

This is my point too. lol. I have not used credit to buy my property. I bought on land contract. just lawyers fee. $75.00 for everything. a couple times I only put as low as $ 500.00 dn & then a year or 2 later would pay a couple to a few thousand more & refinance to take years off the note. the refinancing cost is $35.00. I never refinance to get money. only to pay off early. 1 raise my monthly payments, or 2 pay a lump sum. either way to get paid off sooner.

[tracer]

Originally Posted by allan5oh

Hey Tracer are you the same guy that wrote an article or two for highway star magazine? I recognize the yellow international.

I remember some guy with a Russian name that bought a yellow international with a cat engine. Always looked for follow up articles but never found any.

Yeah, it was me. I wrote for Truck News in 2007 but then they stopped printing my stories because I said something about of their advertisers - a truck dealership who ripped me off. It's a free magazine so they are sort of paranoid of offending any company that buys advertising with them. I'm now writing a short e-book for will-be truckers called "Canadian Trucking Handbook". It's based on my experience as company driver and owner-operator. I still drive the same yellow International with a CAT. Only now it's Dyno tuned and makes 550 HP at 1,425 RPM. Check out Canadian Trucking Handbook

[tracer]

Originally Posted by matcat

Here is what makes absolutely NO sense to me what so ever, you are willing to pay $300,000 for a house, JUST to get $12,000 back in tax! Why not just KEEP the $300,000, $300,000 is worth a hell of a lot more then $12,000! Spend $300,000 just to get $12,000 back, that makes no sense what so ever to me. Now I can see if you happen to be in the market for a house, then yes it is nice to have the $12k back, but to do it JUST to get $12k back makes no sense.

I'd do it as an investment. A builder I found here in Ontario offers a 8% cashback if you have them build your house. So, I thought why not use that as downpayment and build - let's say - a triplex or fourplex. I could move into Unit 1 and rent out Unit 2, 3, and 4. I would spend NOTHING out of my own pocket and the tenants would be paying the mortgage. Plus, I could write off the depreciation on the bigger part of the house.

If I had $300,000 cash sitting under the mattress, I'd probably use it as a downpayment on a few four-plexes or multi-family buildings to create some passive income so that cash comes in every month without my active participation.

In my opinion, passive income beats the heck out of any RRSP or other type of registered savings. You don't need savings, you need CASHFLOW!

[BanditsCousin]

I thought houses don't depreciate and are a tax write-off like a truck would be. I thought the write-off comes from the intersts paid on the loan or something like that.