About Load Acceptance and Debt

[ATeam]

Below is an excerpt from my daily blog. I offer it for newbies to consider as they develop their business strategies and practices.

I don't have any freight to talk about today (Sunday, 8/10/08), but it is morning and there is still hope. We have been waiting for a load since Thursday morning. We are in a good location but still have no freight. The good news is the three loads we hauled last week paid very well. Notwithstanding the waiting we have done, August is off to a strong start.

We have had some offers since Thursday but turned them down because they were priced too low. They were not money-losing loads, but they were not money-makers either. A lot of drivers would have taken them just to stay busy. We don't do that. Running at or near break-even just puts fruitless miles on the truck. We are not in this business to keep busy. We are in it to make money. So, we sit, waiting for profitable freight to haul.

Driving a paid-for truck and being debt-free gives us more freedom to do that than many drivers have. Many live hand-to-mouth. They have to keep the cash flowing in to make their next truck payment and service other debts. So they run freight at break-even levels or worse.

That works in the short run but dooms you to have nothing when it comes time to buy your next truck or retire. You will not drive a new truck unless your creditors say you can. Your retirement lifestyle will be dictated by government policy at the time.

America, land of the free? It may be for some, but it won't be for you if debt rules your life.

If your load-acceptance choices are driven by a need to keep your creditors happy, you are not in business for yourself. You are in business for them. It won't be your kids that go to college on the money you make, it will be theirs. You will be paying for a retirement dream home, but it will be someone else's to enjoy.

Debt is evil. Clever people use it to transfer the fruits of your labor into their basket.

If you are in debt and no longer want to be, there are ways to get out. Go to Google and enter the question, "How do I get out of debt?" Then start reading and take action to purge the demon of debt from your life. Dave Ramsey resources will come up in the search results. Pay special attention to those.

 

[arkjarhead]

I'll be honest Phil. I have some debt. Nothing big if you don't include the car note and small student loans between my wife and I. The reason I bring this up is because you spoke of going to college. Man is it not cheap! They have fees for everything on top of tution. I am in a different situation than most so I don't complain. My wife on the other hand is having to pay out of pocket. Luckily she got into a loan forgivness program. When she graduates college with her Nursing degree she will have to work at one of a certain few hospitals for a certain number of years to get these loans forgiven.

I've always felt that creditors are bad people, but I guess we do it to ourselves. Growing up and until recently I felt like there were no rich people just people with a lot of debt. Now I think that is true for a of people, but not all. When I see people that have a lot of things like a big house, nice cars, boats, rvs, and a summer home I automaticly think there is someone with a lot of debt. That could not be the case, but I think it is. That is just my way of thinking.

 

[TeamCaffee]

Not having debt took a huge weight off of our shoulders and we look at each day differently. We had been debt free for many years before we bought this truck and the day we paid it off was like winning the lotery. Now instead of each month looking to see how much interest we have paid we look to see how much interest we have earned. We are not going to be able to buy our next truck outright but we will be able to get a class 8 truck. We will have even more to put down and our first goal will be to pay off the truck as soon as possible and once again not have the weight of debt.
Even though we are debt free we still have to put money away for the next truck and as such we still cannot take "cheap freight". We never actually stopped making a truck payment we just change the payee to our savings account.

 

[moose]

Thanks A for the post,
i do appreciate you standing up for the newbee .
yet i have to disagree !
a business plan is a good business plan , as long as one know what he is getting into (a big task to overtake at Expedite).
if one will wait till he have enough money to buy a new money making truck , and have an efficient business to run , well it will never happened .
so we get the creditors into our pocket , and see it as a money needed to be spend in order to make money , just like truck payments/insurance/maintenance... we need to keep the interest down and within limits of the business plan.
it you are going to get payed 130K/Y(after fuel) , nothing wrong with taking a 90K /6 years loan.
nothing wrong with taking a 8% interest on that loan , and use someone els money , to make money.
most truckers (i think) are buying a well used truck ,prior of buying a brand new one ,
yet,
if a team is getting into Expedite for the long run , once they know the nature of the Expedite business ,they better off buying into the new truck , in order to make money !
a new truck will get the odds on your side when it come to unexpected expenses , a business stabilize, and the opportunity to make money.
consider it this way , for the first 10 to 12 years of trucking the total money you will pay ,to both the salesman and the mechanics will be significantly lower , driving new equipment.

Point of interest :
an early paying off of a truck in many cases is not a good economic decision .
many successful small-business owners are using someone els money ,to invest .
consult your accountant for more info.



Moose.

 

[TeamCaffee]

Moose you are right about paying the truck off early but in many cases if you look at the interest a first time buyer are paying it is better to pay the truck off and then invest. The other factor for us is risk tolerance which I have very little of when it comes to debt. We have a good friend who has a lot of risk tolerance and he has done very well for himself by like you said having a truck payment and also investing. Depends on each person to which method is best.

 

[moose]

Moose you are right about paying the truck off early but in many cases if you look at the interest a first time buyer are paying it is better to pay the truck off and then invest. The other factor for us is risk tolerance which I have very little of when it comes to debt. We have a good friend who has a lot of risk tolerance and he has done very well for himself by like you said having a truck payment and also investing. Depends on each person to which method is best.

i have to owe this one to the business course i "had" to take at ATBS 6 long years ago as i got into O/O ...
it cannot get out of contacts , rather as a part of a "big picture"...
in other words, you still got to have the founds to sustain the business .
never invest money you cannot afford to loose !



Moose.

 

[davekc]

My personal opinion is to pay off the truck if, and I say if that is your single source of income, and then invest. Both have valid points depending on ones personal circumstances. There is great income to be made on borrowed money. Just make sure as mentioned that you can risk what you throw in the pot