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Old 05-21-2017, 12:07 PM   #41
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Re: Finance


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The last one I purchased was paid for cash. It was cheap and the money was there. I have questioned the decision. I will make more money per dollar invested on the ones that are financed.
I'm all ears...
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Old 05-21-2017, 12:19 PM   #42
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Re: Finance


Finance all the way. Take advantage of section 179.

I'll gladly pay 3-4 thousand to a bank to give me a 40k loan. I can do a lot more with that cash in my pocket.

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Old 05-21-2017, 12:21 PM   #43
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Re: Finance


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Originally Posted by Californiadecks View Post
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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See that's it, people fear debt, but infact sometimes you can make more money by incurring debt. For people who money burns a hole in their pocket it's probably best to pay cash, for those who can manage money financing can be a more productive option.

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Originally Posted by Californiadecks View Post
Makes zero sense. Why use the bank if your tying up the 10k anyway?

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Because it keeps the money in your hands and shifts the liability to the bank.

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Originally Posted by hdavis View Post
New or used (I prefer used), pay cash. Same with tools.

A loan is an added risk.
No it's REDUCED RISK, the bank is taking the risk instead of you!

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Originally Posted by Joasis View Post
My accountant is anything but lazy. Super conservative. And can justify every expense. I have read multiple opinions on always renting everything because of the 100% expense taken, but as I have discussed many times, owning your own equipment can allow you to lower a bid when you must to secure work.

I absolutely believe my accountant or I would not use him...but he accepts what I do and my reasons...and he is obligated to tell me the most financially prudent way to go.

For instance, my CPA is a farmer....big farmer. His family, all CPA's with him, farm probably 3500 acres, and they lease combines and tractors. Get new ones every year. Never any maintenance, and if it goes down, the leasing company provides another machine in 24 hours. And it is 100% deductible.

I have three issues with renting. One is the time to get equipment on site, another other is availability. And the real killer is keeping a telehandler on site any time at all and the rent goes on....if it was based on meter hours, then maybe. But it is based on days and weeks.

I haven't had an offer in a year or more that I can recall, but as the rental businesses have grown in our area, they call and make offers to buy every piece of equipment we own, and we in turn agree to contract with them to rent only their machines, and the only exception is when they don't have a specific machine available in 24 hours. They also would have paid market price to buy every machine we own.

But then, you lose the ability to compete in a bid against a contractor who can place equipment on site and eat the time for weather delays, or whatever...because you are renting and he is not. It could be as bad as bidding against a lowball guy with no insurance.....so we keep the equipment.

I don't know how much equipment most guys keep, but for us, we have 3 telehandlers, 5 scissor lifts (3 fueled RT's), 3 Z-booms, a 60 ft straight boom, and a 12 ton RT crane, Bobcats, excavator, and a trencher. Some of it is old, and it ain't pretty, but I own it and in my humble opinion, you are a step above the competition when your name is on your equipment and not Hertz or United. A semi truck to haul them on....and yes, it is an expense, but a depreciation as well.
The way you have chosen to do it is the more profitable route, if renting was more profitable rental companies wouldn't be able to make money.

Accountants like to sell people on leasing/renting because it's vastly easier to calculate and it matches cash flows in the same period.
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Old 05-21-2017, 12:26 PM   #44
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Re: Finance


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Originally Posted by Bambamm511 View Post
Finance all the way. Take advantage of section 179.

I'll gladly pay 3-4 thousand to a bank to give me a 40k loan. I can do a lot more with that cash in my pocket.

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Sh!t thank you, try explaining that to the rest of CT.
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Old 05-21-2017, 12:59 PM   #45
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Re: Finance


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See that's it, people fear debt, but infact sometimes you can make more money by incurring debt. For people who money burns a hole in their pocket it's probably best to pay cash, for those who can manage money financing can be a more productive option.



Because it keeps the money in your hands and shifts the liability to the bank.



No it's REDUCED RISK, the bank is taking the risk instead of you!



The way you have chosen to do it is the more profitable route, if renting was more profitable rental companies wouldn't be able to make money.

Accountants like to sell people on leasing/renting because it's vastly easier to calculate and it matches cash flows in the same period.
Nope, has nothing to do with how responsible you are with money.

If I couldn't hang on to money, how did I save enough to pay cash? Your analogy falls flat.

My point is even if I could make more money with that money elsewhere it's not worth it to me. I couldn't careless about what I could make with my "car money".

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Old 05-21-2017, 01:04 PM   #46
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Re: Finance


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Originally Posted by Inner10 View Post
See that's it, people fear debt, but infact sometimes you can make more money by incurring debt. For people who money burns a hole in their pocket it's probably best to pay cash, for those who can manage money financing can be a more productive option.



Because it keeps the money in your hands and shifts the liability to the bank.



No it's REDUCED RISK, the bank is taking the risk instead of you!



The way you have chosen to do it is the more profitable route, if renting was more profitable rental companies wouldn't be able to make money.

Accountants like to sell people on leasing/renting because it's vastly easier to calculate and it matches cash flows in the same period.
Don't pay the bank and see what that does to you. Its an absolute risk. Especially to a sole proprietor.

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Old 05-21-2017, 01:06 PM   #47
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Re: Finance


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Originally Posted by Californiadecks View Post
Nope, has nothing to do with how responsible you are with money.

If I couldn't hang on to money, how did I save enough to pay cash? Your analogy falls flat.

My point is even if I could make more money with that money elsewhere it's not worth it to me. I couldn't careless abhor what I could make with my "car money".

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It doesn't fall flat. In our industry we go from famine to feast, we work on a large project and then get a big payout at the end, we don't get a paycheck every two weeks. So when you collect on a big job you see this big fat stack of cash sitting in the bank and you get all horny to blow it. For those who just can't let it sit there, they either go buy a boat or they invest it in their business by getting a piece of equipment.

I don't get your point either, even if you could make more money by financing you wouldn't. Ok Mike, sure, we get it, you don't care to make more money because it's not worth it to you. If I had your money I'd burn mine.
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Old 05-21-2017, 01:09 PM   #48
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Re: Finance


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Originally Posted by Californiadecks View Post
Don't pay the bank and see what that does to you. Its an absolute risk. Especially to a sole proprietor.

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Sure it's still a risk but it's less of a risk because the bank is taking on the liability.
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Old 05-21-2017, 01:36 PM   #49
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Re: Finance


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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?
The last 2 vehicle purchases (my daily driver and a work van) were both no money down, 0% interest. I can put the $60k to work elsewhere and make more of a return. However, if in the future interest rates creep up and I have the cash on hand to buy outright, it's not out of the question. I look at it on a case by case basis.

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How about equipment? Skid steer/mini ex/tractor, shop equipment ect...?
I no longer own any skid steers, excavators, etc... I either subcontract this work out or rent as needed. As far as tools and shop equipment, I pay my credit card balance in full every month to get the 2% cash back reward.

Last edited by NJ Contractor; 05-21-2017 at 01:45 PM.
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Old 05-21-2017, 02:32 PM   #50
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Re: Finance


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Sure it's still a risk but it's less of a risk because the bank is taking on the liability.
I guess what's really dumb about your argument is using money that should go to pay cash for your truck for your business is basically just a loan for your business. Why not just take out a business loan? Not sure what the difference is.

Its nice to not need to do either.

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Old 05-21-2017, 02:35 PM   #51
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Re: Finance


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It doesn't fall flat. In our industry we go from famine to feast, we work on a large project and then get a big payout at the end, we don't get a paycheck every two weeks. So when you collect on a big job you see this big fat stack of cash sitting in the bank and you get all horny to blow it. For those who just can't let it sit there, they either go buy a boat or they invest it in their business by getting a piece of equipment.

I don't get your point either, even if you could make more money by financing you wouldn't. Ok Mike, sure, we get it, you don't care to make more money because it's not worth it to you. If I had your money I'd burn mine.
Then go and tap into ever bit of capital you can borrow. If it pays that much. Using your vehicle Money is a poor man's loan to himself. Basically.

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Old 05-21-2017, 02:36 PM   #52
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Re: Finance


I am a fan of both. Last year we paid cash for 2 vehicles because we could, still didn't drain the account and was able to put money into our retirement accounts. Accountant said it was a good move and it helped our tax liability immensely.

This year we just bought a new ProMaster and financed some of it. We didn't want to drain the account, we got a good rate, and if we want to pay it off at the end of the year because things went well for the year we can. If not the liability is very low and easily affordable.

For investment real estate I prefer to use the banks money. We get cheap rates and we can budget and forecast easier that way.

It works for my partner and I. We have a few meetings a year with our accountant to make sure we are doing things the best we can.
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Old 05-21-2017, 02:47 PM   #53
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Re: Finance


It also depends greatly on where you're at in life. I have no desire to grow my business anymore than where I'm at. In fact I'm taking on less not more. It makes no sense for me to be forced to use borrowed money in fear I may end up losing due to the interest. You in essence become a slave. Because now you have to invest to keep from losing money.

No thank you!

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Old 05-21-2017, 03:04 PM   #54
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Re: Finance


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Sh!t thank you, try explaining that to the rest of CT.
Depends what vehicles you want to buy as well. I don't care that I am paying $50 a month in interest to the bank. I also don't want to spend 47k in cash when I can use someone else's money.

Now if I am only looking at a 20k vehicle, then maybe I'll pay cash.



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Old 05-21-2017, 03:11 PM   #55
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Re: Finance


If they are offering 0% they are more than likely offering a cash incentive as well. It's usually "either or".

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Old 05-21-2017, 03:12 PM   #56
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Re: Finance


Take on too much and it starts to interfere with my personal life. Like golf. Bigly!

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Old 05-21-2017, 03:15 PM   #57
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Re: Finance


The way you have chosen to do it is the more profitable route, if renting was more profitable rental companies wouldn't be able to make money.

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Wouldn't the same argument apply to banks and finance companies?
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Old 05-21-2017, 03:48 PM   #58
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Re: Finance


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I guess what's really dumb about your argument is using money that should go to pay cash for your truck for your business is basically just a loan for your business. Why not just take out a business loan? Not sure what the difference is.

Its nice to not need to do either.

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Because vehicle financing rates can be vastly lower than what the bank will give you a LOC for.

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Then go and tap into ever bit of capital you can borrow. If it pays that much. Using your vehicle Money is a poor man's loan to himself. Basically.

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If you can make a higher return off it absolutely, but it's not practical unless you can borrow money for a real sweet-heart deal.

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It also depends greatly on where you're at in life. I have no desire to grow my business anymore than where I'm at. In fact I'm taking on less not more. It makes no sense for me to be forced to use borrowed money in fear I may end up losing due to the interest. You in essence become a slave. Because now you have to invest to keep from losing money.

No thank you!

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I wouldn't consider it being a slave, honestly I'm sure you have investments, on average what's your yearly return on them?

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If they are offering 0% they are more than likely offering a cash incentive as well. It's usually "either or".

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Certainly, but it worth crunching the numbers. For my car it was a better deal to take the 0%.

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The way you have chosen to do it is the more profitable route, if renting was more profitable rental companies wouldn't be able to make money.

Inner:
Wouldn't the same argument apply to banks and finance companies?
It would be if vehicle and equipment financing and purchasing wasn't such a numbers game. One month there is 20% in manufacturer discounts but the financing rate is though the roof, yet the cash discount is bogus...and could even be higher than the price for the financed rate. The smart buyer finances on an open loan at the high rate, and pays it off in cash the following day, and the bank suffers.

Next month is 0% financing, cash discount that works out to 1.5% per year, but not instant rebates from the manufacturer. The guy who is looking to pay cash gets a vastly worse deal than he would have the previous month, and the guy who finances the whole enchilada is probably at a wash.

I get your point but the comparison is a little apples and oranges, what I should have said to J was that his method of investing in equipment vs renting is the most profitable in the long term.
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Old 05-21-2017, 04:10 PM   #59
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Re: Finance


I'm not saying borrowing isn't a better ROI, I'm just saying not borrowing is worth more than money to me. Because yOU can make more, isn't always the deciding factor. Its not the guy who dies with the most money wins. And because you found a vehicle loan at a low interest rate, doesn't necessarily mean your paying less. In fact they are getting their money and you just think you're getting off with a cheap loan. In other words if they are still getting their money you are paying one way or another.

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Old 05-21-2017, 04:11 PM   #60
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Re: Finance


Almost always when there's a 0% there's also a cash incentive. I'd say 100% of the time. Its "either or".

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