Six Months in Reserves?

Broompilot · Dec 24, 2007

Are we not Business People? Not everything Dave Ramsey has to say can I agree with, but are people spending more than they make? Or is it just a Tread Mill? Tread Mill=are you in better financial shape with all of this years earnings where you were last Dec 31?

If one is gona take on the responsibility of being self employed than one should make sure that one is rewarded for the risk. Starting off with no or little savings? One only needs to read the failures posted on here or elsewhere. 9 out of 10 business that fail is due to lack of $ in back up savings and when the slow down in revenue hits they generally can not float themselves till it picks back up.

What about an Emergency, say you hit that deer and are out for four weeks, or you slip on the step while fueling? How about Medical Insurance? Or as I have heard from another Poster here ones feel that Society will pay the tab in case of illness.

Things do and will happen and usually happen when one has no reserves.

I am guilty and RAISE MY HAND. One way to not have so much tied up in savings is to eliminate ones loan portfolios. 2-visa's at monthly payments of $300 plus one line of credit $150 add a car payment and insurance $400.00. Eliminate those #s and it is %5,100.00 less in reserves you need. What is the majic # for 6 months? That could be an intresting debate. I just know what I feel comfortabale with.

greg334 · Dec 24, 2007

Broom,
I have very serious reasons why people need to talk to an accountant to setup their business, one thing that I used an accountant for in the past is to determine the viability of the business and then what I will need.

In today's world, it seems that many want the cheap way around things, Yes you can incorporate for $X but what then? How do you plan your business and how do you know when you are actually making money compared to doing something else.

To answer your question, I don't have reserve capital in the form of cash, I have it in equity and investments but it is far from a savings and far from a true business reserve that I can use say to get a new truck or what ever. The thing I do have in cash is my deductibles, for some reason I feel these are needed and I also have one credit card where it will get me home where ever I am at - $2000 goes a long way with a rental car.

To be smart, to be really good at this, you need first know what you are doing, then where you are going and then what you want. Hire a professional, not a tax preparer but a real licensed and certified accountant that can tell you what to do. The trucking thing is an addition to this, the business end never changes and never will until we have real tax reform.

Phil has the right idea about tracking expenses, but in his case (as I remember) he is not incorporated, so there is a mixture of personal and business expenses mixed in or at least could be and that I see is the reason for his personal expense tracking.

"9 out of 10 business that fail is due to lack of $ in back up savings and when the slow down in revenue hits they generally can not float themselves till it picks back up."

I just don't agree with this, I strongly feel most business failures come in generally two forms - a lack of planning and lack of understanding how business works and the bad choices in a company to contract with. The former goes back to my first paragraph and the latter is something I see as a big problem, many companies spend time and resources to micromanage the fleet but don't spend equal time in sales and revenue generation - no excuse for a large company to keep any truck in their fleet idle.

And what is killing me is taxes. I have to take out 1/3 of my gross for taxes and this is where I lose money because this money is idle and does nothing except make the feds money. I feel that we, the people in this industry should support a real tax reform and not just a deduction or two added this year. I mean I have hit so much resistance about the Fair Tax by truckers it is unbelievable and many don't want to put the effort into learning about it and finding out how much more money you end up with without spending a fortune to do your tax returns like the present system. http://www.fairtax.org