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Old 05-20-2017, 05:20 PM   #1
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Finance


I know it's been beat to death but not consolidated in one thread. Do you buy vehicles new or used? Always cash or Finance? Or finance only if interest is a certain percentage? Your vehicle only or crew vehicles too?

How about equipment? Skid steer/mini ex/tractor, shop equipment ect...?

Kind of examaning business model and business plan, this place is always good to get a bunch of different perspectives and view points

Thanks in advance.
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Old 05-20-2017, 06:26 PM   #2
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Re: Finance


I don't really count since I'm a small operation but I finance new, buy tools in cash. I don't​ have any depreciable assets besides computers and some line blowing gear, but it's only worth a couple grand so it wasn't financed.

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Old 05-20-2017, 06:43 PM   #3
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Re: Finance


Sounds like you are fixing to bust a move.

My accountant told me to rent everything and it is 100% deductible. I own everything and depreciate. I have been buying a new truck every year now and looking at the payment as an expense. Works.
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Old 05-20-2017, 07:10 PM   #4
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Re: Finance


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Sounds like you are fixing to bust a move.

My accountant told me to rent everything and it is 100% deductible. I own everything and depreciate. I have been buying a new truck every year now and looking at the payment as an expense. Works.
He told you to do that because CCA calculations are more work for him. That's a classic lazy ass accountant recommendation.

You can't write off payments like an expense, you have to depreciate the asset.
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Old 05-20-2017, 07:16 PM   #5
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Re: Finance


I paid everything in cash almost always used except the wife's car.

My way of doing things though is probably not right for you though. Tell you what though, I'm really glad everything is paid cash cause now that I'm out of the game, there is very little stress about getting rid of some of the bigger things, (skid steer, work trucks, etc). If I had payments on them I don't know how I would be able to do it.
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Old 05-20-2017, 07:23 PM   #6
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Re: Finance


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Originally Posted by Deckhead View Post
I paid everything in cash almost always used except the wife's car.

My way of doing things though is probably not right for you though. Tell you what though, I'm really glad everything is paid cash cause now that I'm out of the game, there is very little stress about getting rid of some of the bigger things, (skid steer, work trucks, etc). If I had payments on them I don't know how I would be able to do it.
If you had payments then you wouldn't have spent the lump sum at the beginning so you would still have money in the bank....so it's a wash.
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Old 05-20-2017, 07:29 PM   #7
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Re: Finance


I pay cash for all my vehicles. Write off the depreciation.


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Old 05-20-2017, 07:35 PM   #8
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Re: Finance


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I pay cash for all my vehicles. Write off the depreciation.


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I use the time value of money. My investment profile has returned on average 10 percent per annum for the past 7 years. So if I can finance a vehicle with an open loan at 2.99 percent and the dealer doesn't offer a substantial discount for cash there is no incentive to pay cash for it...they money is more valuable in my hands.

Much like my car, it was 0 percent financing, with a bogus cash discount. I put 1500 down and got them to refund it to me when I picked up the vehicle.

Money now is more valuable than money tomorrow.
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Old 05-20-2017, 07:38 PM   #9
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Re: Finance


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Originally Posted by Californiadecks View Post
I pay cash for all my vehicles. Write off the depreciation.


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Ontop of that if you finance it your purchase price is higher and you have more you can write off, so if you invest that money you don't pay capital gains until you cash it in, so you are effectively deferring your income.

Ontop of that we have tax free savings accounts in Canada, so it's a way to increase your expenses in the next few years and turn profit on that extra money you held onto tax free (to a certain extent).

Nothing wrong with paying cash, but it's not always the best choice long term.
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Old 05-20-2017, 07:39 PM   #10
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Re: Finance


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If you had payments then you wouldn't have spent the lump sum at the beginning so you would still have money in the bank....so it's a wash.
Except I'd be paying interest on things that are just sitting and not making money. It doesn't feel so bad now and we're contemplating on keeping skid steer because there is no "need" to get rid of it. Woodworking machinery isn't going anywhere. It's staying at the new house with the new shop so I can do fun stuff finally.
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Old 05-20-2017, 07:42 PM   #11
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Re: Finance


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Originally Posted by Inner10 View Post
Ontop of that if you finance it your purchase price is higher and you have more you can write off, so if you invest that money you don't pay capital gains until you cash it in, so you are effectively deferring your income.

Ontop of that we have tax free savings accounts in Canada, so it's a way to increase your expenses in the next few years and turn profit on that extra money you held onto tax free (to a certain extent).

Nothing wrong with paying cash, but it's not always the best choice long term.
I disagree. If you have the cash there's a lot to be said for not having a payment. It's the one thing that got me through the big recession. I carried almost zero debt month to month. I would have been buried if I had payments.
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Old 05-20-2017, 07:42 PM   #12
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Re: Finance


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Except I'd be paying interest on things that are just sitting and not making money. It doesn't feel so bad now and we're contemplating on keeping skid steer because there is no "need" to get rid of it. Woodworking machinery isn't going anywhere. It's staying at the new house with the new shop so I can do fun stuff finally.
Assuming it's an open loan you could just pay it off. The bottom line is you had the money to pay cash, whether you did or not isn't that relevant because​ you still have either the money and a machine with debt, or no money and a paid for machine. Now if you finance it and didn't have the money then you would be in panic mode.
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Old 05-20-2017, 07:43 PM   #13
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Re: Finance


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I disagree. If you have the cash there's a lot to be said for not having a payment. It's the one thing that got me through the big recession. I carried almost zero debt month to month. I would have been buried if I had payments.
No you wouldn't​ have because instead of the money being in your machine it would be in your bank account so you could make payments.
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Old 05-20-2017, 07:58 PM   #14
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Re: Finance


I've Always put a chunk down so the payment isnt crazy high each month . I could possibly need to replace 3 vehicles in the near future so should be interesting figuring out how pull this one off when it happens. One or two will be used I'm sure I'll be seeking advice on here.


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Old 05-20-2017, 08:07 PM   #15
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Re: Finance


Quote:
Originally Posted by Inner10 View Post
Ontop of that if you finance it your purchase price is higher and you have more you can write off, so if you invest that money you don't pay capital gains until you cash it in, so you are effectively deferring your income.

Ontop of that we have tax free savings accounts in Canada, so it's a way to increase your expenses in the next few years and turn profit on that extra money you held onto tax free (to a certain extent).

Nothing wrong with paying cash, but it's not always the best choice long term.


I don't know what will become of my life's situation for the next 5 years. Not worrying about that or payments is worth much more than the latter has to offer to me.


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Old 05-20-2017, 08:18 PM   #16
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Re: Finance


Let's say a vehicle costs $10k.

I will borrow $10k from the bank, using my $10k cash as collateral.

Then I make payments to the bank. When I'm done paying it off, I get $10k back, and still have my vehicle.

Does that make sense?
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Old 05-20-2017, 08:22 PM   #17
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Re: Finance


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Let's say a vehicle costs $10k.

I will borrow $10k from the bank, using my $10k cash as collateral.

Then I make payments to the bank. When I'm done paying it off, I get $10k back, and still have my vehicle.

Does that make sense?
Makes zero sense. Why use the bank if your tying up the 10k anyway?

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Old 05-20-2017, 08:33 PM   #18
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Re: Finance


If I have $10k in my pocket, I don't want to spend it. I want to keep it.
But I want a new truck. I don't want to finance it , and be a slave to the lender.

However, if I know I have that $10k sitting in the bank, and am making payments towards getting that back, I feel better about it.

Then there is the thrill of that final pymt, and having the newish truck, and the $10k. Sell the newish truck, add those funds to the $10k I just got out of hock. Now I have $20k, put it down as collateral for a $20K truck, and start the cycle over.

Yes, the reasons are emotional, and thus not good business. Wanted to see what some of y'all would say about it. Money management is not my strong point. For that reason, I limit my exposure to debt.

Some say to use other people's money as much as you can. I prefer to limit my risk. If I roll it up tomorrow, I don't want to be struggling to pay off this and that. Kinda like Deckhead's statement.
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Old 05-20-2017, 08:57 PM   #19
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Re: Finance


what ur asking is pretty much akin to "hey i got this mole what should i do?"....

Go ask a pro, your accountant.

They know youe whole financial situation and can likelt give you the hest advice.

At the very least give you a couple of bones to chew on...l
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Old 05-20-2017, 09:03 PM   #20
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Yep, I meet with my accountant monthly.

This approach is what I do with my play money and my personal toy truck. Not my work truck.

My accountant already knows I'm irrational.

Or maybe Griz comment was meant for Jaws.

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Last edited by Lettusbee; 05-20-2017 at 09:06 PM. Reason: IDK
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