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drpepperinacan
04-03-2010, 02:17 AM
I am trying to buy a zero turn this year but since I am only 19 I can't get any credit to buy and I have almost 30 yards to cut every two weeks! a riding mower just isn't going to cut it any more! someone please let me know If you know of a way I can get financing to buy a mower. I have applied for all the credit cards, bank loans , in house financing at dealerships for mowers and lots more, I am running out of options , I guess you could say I am stuck between a rock and a hard place! thanks

topsites
04-03-2010, 02:19 AM
It's real simple:
1. Get a job, follow the rules, do what they ask of you and get to work on time.
2. Save your money and keep working your job.
3. Repeat step 2 as often and for as long as necessary.
4. When you have enough, you buy what it is you wanted all along.

The reasons...
If you can't find work, if you are unable to follow rules,
if you can not do what people ask of you, or if you can not save money?
You will not survive in business.

Hell on Blades
04-03-2010, 03:16 AM
I'd agree with Topsites. There is no easy way to build credit. I will tell you that if you have all the appropriate business documents, plan, forecast etc. and you take signed contracts, some credit unions may give you a look.

However, I am not an advocate of doing business on credit. With 20 yards, hopefully averaging $45?? you'd have $1800 after the first two services. Buy a used walk behind with a sulky until you can afford a zero turn.

Hawg City Lawns
04-03-2010, 03:39 AM
you should go around to some local dealers look around at their used equipment get to know the owners tell them your situation and if you look like a hard worker and seem passionate about what you do the owners might take a risk and set up a payment plan right there im sure they know that all of us have to start somewhere might be different there though

Weeded!
04-03-2010, 03:56 AM
After one year using a zero turn on residential yards I went back to using only walk behinds. They did not damage the turf as much and were faster on yards up to 18K feet (unless you were blasting full speed and tearing up turf).

After a very wet season a few years ago a big selling point of mine was "we don't put those big riders on your yard" and it worked to get clients.

I have 36" and 52" hydros on every truck. Belt drives work great- just be careful not to strip the gears in the tranny. I cut the "knee-shifter" with a hacksaw to help this. Belts are 1/2 cost.

ProSeasons
04-03-2010, 04:09 AM
It's real simple:
1. Get a job, follow the rules, do what they ask of you and get to work on time.
2. Save your money and keep working your job.
3. Repeat step 2 as often and for as long as necessary.
4. When you have enough, you buy what it is you wanted all along.

The reasons...
If you can't find work, if you are unable to follow rules,
if you can not do what people ask of you, or if you can not save money?
You will not survive in business.

YEAH!!! THIS is the plan! If America had used this financial plan we would have had NO recession!

You know what's cool about commercial lawn equipment? It's so friggin' tough that buying a USED unit is actually still a good investment. No warrenty or dealer support, you say?

Learn to WORK ON IT YOURSELF!

Richard Martin
04-03-2010, 06:39 AM
Try Wells Fargo Leasing. Don't let the leasing thing bother you. It's usually a lease with a one dollar buyout at the end of the lease. The IRS treats these types of leases just like a regular financing deal. You "lease" the mower for 3 years and then you give them a dollar at the end of the lease and the mower is yours to do with as you please. Don't be afraid to call them. The worst that they can do is say no.

https://www.wellsfargoleasing.com/golf_turf_equipment_leasing/index.html

drpepperinacan
04-03-2010, 10:23 AM
thanks for the help I will call them

Cboy7
04-03-2010, 11:12 AM
It's real simple:
1. Get a job, follow the rules, do what they ask of you and get to work on time.
2. Save your money and keep working your job.
3. Repeat step 2 as often and for as long as necessary.
4. When you have enough, you buy what it is you wanted all along.

The reasons...
If you can't find work, if you are unable to follow rules,
if you can not do what people ask of you, or if you can not save money?
You will not survive in business.

I agree. good word

WholeSaleSteve
04-03-2010, 11:15 AM
Dr. Pepper,

Congrats on your business. The other members here have given you some great advice. I started in the lawn care business when i was 13yrs old and when I was 16 had my own "real" business. My lawn business allowed me to work my way through college without taking any loans. I graduated from the University of Florida and still am in the lawn care business. My compnay does commercial and industrial mowing. I also own a large power equipment business.

Access to credit is like gold. Once you start to get a credit rating always pay on-time and make sure you keep a good credit rating. Its easy to mess up and hard to fix it. I see people in my dealership everyday that can't get financed event hough they have good business becasue they have some late pays on their credit history.

Now for you....At my dealership I enjoy meeting young folks that were like me and getting into the business. I do in-house financing with my own money for the right person and also have a really neat rent-to-own program. Maybe you can meet the owners of some local dealerships and suggest a rent-to-own or some other creative fianance arrangemnt to help you get started. When I was in college I had just such an agreement with a dealership owner about 60 miles from where I lived at the time. Like I said I have done this as well for young folks needing some help. I look at it as an investment in a long-term customer. I don't do it for everyone and am very slective. Very rarely have I ever gotten burned, most people are good people and do what they say.

Another option I see often is finding someone with a large property or small farm and exchange the labor of maintaining their property for them buying a ZTR and allowing you to use it for "X" num,ber of hours per woeek on other jobs. After you go over whatever agreement you have make sure you can use it on a per hour basis if you are busy. (i.e rent it after you use the agrred hours). Eventyually you can buy your own ZTR but in the short term have access to a good mower for a reasonable cost---in this case some labor. In a sense the owner of the property and ZTR becomes an investor with your company.

Being creative in any business will help you succeed. In this tough economy its creative financing and creative relationships that often times allow you to make money and be successful when others are failing.

Always remeber do what you say you will do, follow trhough and make your word your bond. You will go far with that dsimple mantra and attiftude.

Goodluck and if you have any questions or would like some advice in the lawn care business feel free to msg me or post on line here. I am always happy to give you advice with one caveat. Always reserach and seek advice from multiple sources and make the decision thats best for you.

Happy Easter

zak406
04-03-2010, 11:19 AM
Maybe try a local credit union

mbrew
04-04-2010, 10:08 AM
I'm going to jump in here with the folks that advise against using credit. When you buy on credit you have taken on a liability, and let risk enter your business model. I'd like you to take a minute and really think about the words liability and risk because most people don't. When you are in debt, you are working for and responsible to someone else, when you pay cash, you're working only for you and you are in control.

I'm just now thinking about entering this business (again) and I will follow my own advice if I do, but I also do personal financial counseling and I often see terrible problems cause by indebtedness. Many of these people were in great shape until some unexpected problem arose, then their liabilities became huge problems for them. To give an example: If you step in a hole and break your leg or are injured in a car accident and can't work, how would you service the debt?

The ability to delay your own gratification is a sign of maturity. Just some things to think about - and congratulations on the number of accounts that you've put together! You're off to a great start.

Mike

MikeKle
04-04-2010, 10:31 AM
IF you have been applying at lots of places, that will actually bring your score down a bit, they dont like to see alot of applying over a short amount of time, but I know what you are going thru, I had bad credit when I was younger and it is a b**ch to get a loan if you dont have a good score. You may want to try this though, apply for a loan at a credit union and if the mower you want cost $5000. apply for a loan of $9000. This might sound crazy, but what the credit union may do is look at your score and come back with a counter offer lower than the amount you requested, and chances are it will be in the neighborhood of what you wanted in the first place. Some credit unions will do this, and some do not, I know C&O does. It may work for you, and it may not, but you will probably need a co-signer if it doesnt.

nepatsfan
04-04-2010, 10:33 AM
:dizzy::dizzy::dizzy::dizzy:Maybe try a local credit union

Credit is a good thing to have in business. A lot of guys that say buy with cash are a 1 man operation that don't neccessarily understand the tax benefits of low rate finanancing and depreciating equipment. You cannot abuse it and don't spend beyond your means but it is good to have to expand and grow. Start off by going to stores....sears, target or something like that. Get a credit card. Make small purchases and pay them off on time in full every month. It isn't an easy process but once you build good credit for 6 months to a year the offers will start coming in from everywhere. I am not saying you should finance everything but it is not a bad idea to build good credit and finance stuff you can afford at low rates. It also helps to keep working capital in your business account so you will have money for unforseen and incidentals. Most large businesses use finanacing as a way to grow their businesses. (all your major retail, restaraunts, basically everyone) You just have to be responsible, most of the stuff I finance, I get 0% on. I would be downright stupid not to take a 0% financing offer. Anything under 5 % for a piece of equipment is worth it to me. I can see some benefits of buying stuff outright. If you are not responsible with money or you don't have the work to support it. All my bills are paid on time every month and I always get the best rates on financing. I am debating right now whether to take 0% from cat for 48 months on a new skid steer. Works out around $1000 a month or buying one for 10-12 k outright used. Benefits to the 12k one....its paid for for a quarter of the price. Downsides....if it breaks and costs me 3k to fix. I have over a years worth of payments made on a brand new machine with a warranty. tax benefits...can depriciate the new machine for the life of the loan and its free finanancing. things to think about:dizzy:

Richard Martin
04-04-2010, 11:13 AM
When you buy on credit you have taken on a liability, and let risk enter your business model. I'd like you to take a minute and really think about the words liability and risk because most people don't. When you are in debt, you are working for and responsible to someone else, when you pay cash, you're working only for you and you are in control.

To give an example: If you step in a hole and break your leg or are injured in a car accident and can't work, how would you service the debt?

Risk is a part of everyday life. You live with it and manage it.

Your example of being in a car accident or breaking your leg is a poor one. Your whole premise is that the loan that you took out would be the only thing that isn't paid if you can't work. The chances are excellent that the $200 a month equipment loan that you took out will only account for a very small portion of your bills that won't get paid if you are incapacitated. Since you probably wouldn't be able to pay your electric bill, pay your rent or mortgage, buy food, buy gas or any of a hundred other things you pay for in a month maybe you shouldn't take on that risk too. We'll just eliminate all risk and sit in the corner and perish.

And the notion that we're working for someone else when we take out a loan is completely and utterly absurd.

A loan is a 2 way street. Risk is borne by both parties. If you don't pay the loan back you stand the risk that the item that you used to secure the loan will be repossed and there will be a red mark put on your credit record. That's about all that usually happens. The lender can sue you for any differences between the amount owed and what he can actually recover. You can easily get out of that by declaring bankruptcy. The lender would end up getting screwed. On the other hand the lender assesses the risk that you won't pay back the loan and he charges a fee (interest) to lend you the money based on his appraisal of your credit risk. If you don't pay the loan back he usually ends up getting screwed in some fashion.

Now the part about working for someone else....

You're going to pay for the item one way or the other. You can either pay for it before you buy it or you can pay for it after you buy it. You still end up with the item. Period. In most cases the huge majority of the money that you give to the lender is money that he lent you. You're just paying it back. You received an item and you're simply paying for it. It's just like as if you were to put money away once a month to save up to buy the item with cash. You do also pay a fee every month (interest) for the lender to assume the risk that you will pay the money back. It isn't like you borrowed money from a loan shark and he will come and break your legs if you don't pay it back.

You are NOT working for someone else. You still have a choice. If you don't pay it back it's not like you will be imprisoned or they will take your first born.

topsites
04-04-2010, 11:16 AM
Well, I remember them days...
Oh yes, yes, been there, done that.
More than once, way more :cry:

When I wanted... No, when I HAD to have something they said I could not get.
Who they were, these people who said that, the bankers, the parents, these business owners and grown ups,
dog gone it I said I had to have it.

And I would listen to the answers one after the other until!!!
I heard the one answer I was wanting to hear, somehow and oddly enough
failing to realize that ALL the rest of the answers were pointing to the same
thing, which is saying I really couldn't have it right this moment.

Long story short lets just say I made life a lot harder on myself.

You know what's cool about commercial lawn equipment? It's so friggin' tough that buying a USED unit is actually still a good investment. No warrenty or dealer support, you say?

Learn to WORK ON IT YOURSELF!

Dang straight!
I've been in business, this is my 9th year, and more than ever all I look at buying is USED!

The new stuff is so dang expensive *I* can't afford it.
I can get a loan, lickety split no co-signer or nothing, that's not the problem.
The problem is I don't got the money.
Plain and simple, I just don't got it.

Why I don't just let myself go, why I don't allow myself to forget rational thought
and simply follow my impulse, get the dang loan and have a new mower?

Why, I reckon after so many years of doing things the hard way, possibly after banging my hard head against
the wall how many times, maybe a soft spot did somehow develop and something finally must have sunk in.

Peace out

nepatsfan
04-04-2010, 11:26 AM
Well, I remember them days...
Oh yes, yes, been there, done that.
More than once :cry:

When I wanted... No, when I HAD to have something they said I could not get.
Who they were, these people who said that, the bankers, the parents, these business owners and grown ups,
dog gone it I said I had to have it.

And I would listen to the answers one after the other until!!!
I heard the one answer I was wanting to hear, somehow and oddly enough
failing to realize that ALL the rest of the answers were pointing to the same
thing, which is saying I really couldn't have it right this moment.

Do you really have to know the conclusion?
Lets just say I made life a lot harder on myself.



Dang straight!
I've been in business, this is my 9th year, and more than ever all I look at buying is USED!

The new stuff is so dang expensive *I* can't afford it.
I can get a loan, lickety split no co-signer or nothing, that's not the problem.
The problem is I don't got the money.
Plain and simple, I just don't got it.

Why I don't just let myself go, why I don't allow myself to forget rational thought
and simply follow my impulse, get the dang loan and have a new mower?

Why, I reckon after so many years of doing things the hard way something finally must have sunk in.

Peace out

You obviously do not understand the benefits of depriciation. In a lot of instances you end up paying less for a new machine than for a used one. Between the tax break and maintenance, it is often times more beneficial to finance a new machine. I am definitely not opposed to buying used, I have bought many used things and will continue to, but to use a blanket statement on finanacing vs. paying cash is sort of ridiculous and is an uninformed answer. It is not that cut and dry and would depend on the equipment and also the finanace rate and variables like repair costs and what could go wrong. There is no right or wrong answer. The largest businesses in the world use financing. They don't all succeed but they make more than most us. Just something to think about. If you told me you had a 1 year old scag wild cat with 100 hours and no problems for 4k or a new one for 12k. I am going with the used. I will take that risk. There are a million variables.

topsites
04-04-2010, 11:29 AM
You obviously do not understand the benefits of depriciation.

My equipment depreciates all the same.

unkownfl
04-04-2010, 12:07 PM
You need to seek a SBA packager. They will draw up everything for a SB grant or loan from uncle Sam.

GrassIsGreenerLawnCare
04-04-2010, 12:24 PM
ya man...i would try to go into it without any debt if possible. It took me a few years to save up enough to start my business and i am 25. i just didnt want to jump into it with a bunch of monthly payments and not alot of customers lined up. so i saved until i knew i was ready. i bought 2 used walk behind with less than 200 hours a piece. bought all my groundworking equip new though. im starting out with a smaller trailer that i soon will be able to upgrade. but the best thing of all is that i dont "owe" anyone any money. if i lose....its my personal loss not anyone elses. this way i cant screw up my credit like i did when i was younger. the best way to start building your credit is to go to like Sears and kay jewlers and small places tht will give you $300 credit limits and buy things and PAY ON TIME. this way you can slowly establish some sort of credit. good luck

mbrew
04-04-2010, 01:31 PM
I really don't have time for this, but it is an instructive exercise so I'll address a few comments made here and address what I believe are misconceptions

My ability to depreciate equipment on my taxes (federal) has nothing to do with whether its financed or not. I can run the same depreciation schedule on it financed or not and even if it is used. Don't take my word for it or for that matter anyone's word on this matter. Get out a pencil and paper and your tax book and work through it for yourself.

Now "If I get hurt I still have to make my mortgage, electric bill etc, so I may as well finance my equipment."

If you don't have money in the bank to cover those expenses for at least a few months, you are running really, really tight and are in trouble. Yes, you could put money in the bank to cover the loans also, and in fact that brings up another couple of good discussions about debt:

"Instead of paying cash, I'll finance @ 6% and put my money in the market where it averages 10%." Yep. That can be a good plan, provided the market doesn't tank just before you need the money. I have lots of money in the market and will have for years to come, but my 10 year returns aren't looking real great right now. Using a bank account is the same argument. "I'll take 0% financing and buy a CD @ 2.75% and I'll make money". I agree, although the amount you will make won't do more than buy a nice dinner. In either of these two situations the individual financing in this way has taken step to mitigate his risk, particularly in the case where the money to cover the loan is in an insured account. Most people that borrow money aren't in this category though and certainly not our OP. I still like paying cash. When I do, I have less accounting to do and accounting is a money and time waster.

The next common thing I hear is that "the interest is tax deductible and doesn't cost anything." Like a lot of things, that's partially true. The interest is an expense that comes directly off my bottom line, so if I made 50K and had $500 in interest deductions I now will only pay taxes on 49.5K. Now assuming I'm in the 25% tax bracket, spending that $500 in interest just saved me $125 in taxes. That's better than a stick in the eye but I'm still out $375 in interest expense. Although there are several here that are in higher brackets, most are in a much lower one, so the savings isn't quite so good. Despite a lot of that conventional "wisdom" that's out there, there is no way to make money on taxes by buying something. The tax savings can mitigate the purchase price to an extent, but it will never alleviate it. That include the ever popular home mortgage deduction. Don't take my word for it and don't take your accountants, do the math for yourself and see how it comes up.

There are a lot of companies use debt to grow, but there are many that crater because of it too. US Steel, Bethlehem Steel, Braniff, World COM, GM, Chrysler, Enron and countless others had debt, cratered and left massive trails of devastation in their wakes. I know lots of people that not only lost their jobs, but their retirements too when these companies failed. Bringing it down to a more personal level, there are restaurants, LCO's and other business on every street corner that went under and left their owners with huge debt loads. There are a lot of misconceptions about the amount of help available through bankruptcy. If you stop operating for any reason and you don't have debt, you have assets. Your equipment and and maybe your accounts are yours to sell and use the money for whatever purpose that you desire.

I know a young man around here that has his own lawn company. He has 3 crews, no debt, replaces most of his equipment every year,(mostly 21" stuff) and takes a one month vacation overseas somewhere every year. He has motorcycles and other toys - all paid for and NO worries. Sounds like a pretty good place to be to me.

About me: I'm 50 years old and semi retired. I haven't worked regularly since August of last year although I have picked up a few odd jobs since the first of the year. I have a substantial net worth, but I will still need to earn a little money for a few more years. I should be financially independent within the next 5 years. I was given this advice when I was young but instead I listened to the majority and I used credit "wisely". Had I followed this advice more closely, I would be fully retired now and traveling. Instead I'm thinking about starting a property maintenance service. One of the things I do is help people avoid debt. I know other that help people get out of debt, but I have a hard time doing that. Helping people get out when they're in over their heads is a heartbreaking gut wrenching proposition.

Got to go clean my trailer now.

Good luck,
Mike

P.S. I did lawn service when I was young and I didn't think there was anything better than an ice cold DR. Pepper on a hot Texas afternoon, but we drank it out of glass bottles. I still have good memories of that.

Richard Martin
04-04-2010, 01:43 PM
Now "If I get hurt I still have to make my mortgage, electric bill etc, so I may as well finance my equipment."

Since I'm the only person to mention this scenario I can safely assume you were talking about my statement.

You are completely twisting my words around. My intention was not as you interpered in the slightest. My intention was as written. Period.

Whether or not someone chooses to finance an item should take into consideration their current bills and their ability to pay any new bills that they may incur. Just the same as a person would lay money aside for a mortgage, electric bill etc they should also have provisions for paying any installment plans in an emergency.

Cboy7
04-04-2010, 02:08 PM
I really don't have time for this, but it is an instructive exercise so I'll address a few comments made here and address what I believe are misconceptions

My ability to depreciate equipment on my taxes (federal) has nothing to do with whether its financed or not. I can run the same depreciation schedule on it financed or not and even if it is used. Don't take my word for it or for that matter anyone's word on this matter. Get out a pencil and paper and your tax book and work through it for yourself.

Now "If I get hurt I still have to make my mortgage, electric bill etc, so I may as well finance my equipment."

If you don't have money in the bank to cover those expenses for at least a few months, you are running really, really tight and are in trouble. Yes, you could put money in the bank to cover the loans also, and in fact that brings up another couple of good discussions about debt:

"Instead of paying cash, I'll finance @ 6% and put my money in the market where it averages 10%." Yep. That can be a good plan, provided the market doesn't tank just before you need the money. I have lots of money in the market and will have for years to come, but my 10 year returns aren't looking real great right now. Using a bank account is the same argument. "I'll take 0% financing and buy a CD @ 2.75% and I'll make money". I agree, although the amount you will make won't do more than buy a nice dinner. In either of these two situations the individual financing in this way has taken step to mitigate his risk, particularly in the case where the money to cover the loan is in an insured account. Most people that borrow money aren't in this category though and certainly not our OP. I still like paying cash. When I do, I have less accounting to do and accounting is a money and time waster.

The next common thing I hear is that "the interest is tax deductible and doesn't cost anything." Like a lot of things, that's partially true. The interest is an expense that comes directly off my bottom line, so if I made 50K and had $500 in interest deductions I now will only pay taxes on 49.5K. Now assuming I'm in the 25% tax bracket, spending that $500 in interest just saved me $125 in taxes. That's better than a stick in the eye but I'm still out $375 in interest expense. Although there are several here that are in higher brackets, most are in a much lower one, so the savings isn't quite so good. Despite a lot of that conventional "wisdom" that's out there, there is no way to make money on taxes by buying something. The tax savings can mitigate the purchase price to an extent, but it will never alleviate it. That include the ever popular home mortgage deduction. Don't take my word for it and don't take your accountants, do the math for yourself and see how it comes up.

There are a lot of companies use debt to grow, but there are many that crater because of it too. US Steel, Bethlehem Steel, Braniff, World COM, GM, Chrysler, Enron and countless others had debt, cratered and left massive trails of devastation in their wakes. I know lots of people that not only lost their jobs, but their retirements too when these companies failed. Bringing it down to a more personal level, there are restaurants, LCO's and other business on every street corner that went under and left their owners with huge debt loads. There are a lot of misconceptions about the amount of help available through bankruptcy. If you stop operating for any reason and you don't have debt, you have assets. Your equipment and and maybe your accounts are yours to sell and use the money for whatever purpose that you desire.

I know a young man around here that has his own lawn company. He has 3 crews, no debt, replaces most of his equipment every year,(mostly 21" stuff) and takes a one month vacation overseas somewhere every year. He has motorcycles and other toys - all paid for and NO worries. Sounds like a pretty good place to be to me.

About me: I'm 50 years old and semi retired. I haven't worked regularly since August of last year although I have picked up a few odd jobs since the first of the year. I have a substantial net worth, but I will still need to earn a little money for a few more years. I should be financially independent within the next 5 years. I was given this advice when I was young but instead I listened to the majority and I used credit "wisely". Had I followed this advice more closely, I would be fully retired now and traveling. Instead I'm thinking about starting a property maintenance service. One of the things I do is help people avoid debt. I know other that help people get out of debt, but I have a hard time doing that. Helping people get out when they're in over their heads is a heartbreaking gut wrenching proposition.

Got to go clean my trailer now.

Good luck,
Mike

P.S. I did lawn service when I was young and I didn't think there was anything better than an ice cold DR. Pepper on a hot Texas afternoon, but we drank it out of glass bottles. I still have good memories of that.
Great post , thanks for taking the time . I appreciate wise advice from older people

rain man
04-04-2010, 05:50 PM
Yikes. I don't like to finiance but when I do its one thing at a time and not always the most expensive choice. Everything is paid off now so life has less stress these days.

brucec32
04-04-2010, 07:18 PM
Do any Americans go out and get a JOB anymore?

No pot to whizz in broke, minimal experience, minimal education, but ready for entrepreneurship? I think not.

topsites
04-04-2010, 07:52 PM
Get a load of this...

You are short on work.
And, the payments are due.

Mr. and Ms. Mother of PITA call you, and doesn't it suck they are the ONLY ones who have called!
Sure enough, a boat load of hard labor that you don't really want to do, and on
top of that they want the absolute CHEAPEST price they can squeeze out of you,
after much back and forth you reluctantly agree and just when you thought it was over?

They want all the frills and thrills that would come along with the most
expensive service, and they don't just want it but they EXPECT it!
Just to make sure you understand, they call you like FIVE times in two days over this $125 job.

Then you finally show up to do the work bright and early like y'all agreed, and wow look they're home!!!
And they come outside and work "with" you the entire time, sure enough a 4 hour job now takes about the whole day.

And you...
Don't have a choice in the matter.
Because you ain't got no money.

You HAVE to man up and do it, but the kicker of it all is they know it too.

Has this ever happened to you?
Because it's happened to me!
Better still MY equipment was paid for and still it happened, I can't imagine
what it would have been like had I been in debt, nor do I want to.

So don't let this happen to you lol

rain man
04-04-2010, 08:04 PM
Do any Americans go out and get a JOB anymore?

No pot to whizz in broke, minimal experience, minimal education, but ready for entrepreneurship? I think not.

Not related to the original discussion but I see people every day who sell used household items which they put on the dirt because they can't afford a table to put it on. Perhaps I just don't understand but it would seem that a regular paying job would be a better idea.

nepatsfan
04-04-2010, 09:02 PM
Yikes. I don't like to finiance but when I do its one thing at a time and not always the most expensive choice. Everything is paid off now so life has less stress these days.

It doesn't stress me out. I would only finance what I could afford to pay for. To each his own. If I get 0% it is absolutely stupid to pay in full for something you can finance. I really don't even finance that much but to use a blanket statement saying that there is no benefit is kind of silly.

nepatsfan
04-04-2010, 09:13 PM
I really don't have time for this, but it is an instructive exercise so I'll address a few comments made here and address what I believe are misconceptions

My ability to depreciate equipment on my taxes (federal) has nothing to do with whether its financed or not. I can run the same depreciation schedule on it financed or not and even if it is used. Don't take my word for it or for that matter anyone's word on this matter. Get out a pencil and paper and your tax book and work through it for yourself.

Now "If I get hurt I still have to make my mortgage, electric bill etc, so I may as well finance my equipment."

If you don't have money in the bank to cover those expenses for at least a few months, you are running really, really tight and are in trouble. Yes, you could put money in the bank to cover the loans also, and in fact that brings up another couple of good discussions about debt:

"Instead of paying cash, I'll finance @ 6% and put my money in the market where it averages 10%." Yep. That can be a good plan, provided the market doesn't tank just before you need the money. I have lots of money in the market and will have for years to come, but my 10 year returns aren't looking real great right now. Using a bank account is the same argument. "I'll take 0% financing and buy a CD @ 2.75% and I'll make money". I agree, although the amount you will make won't do more than buy a nice dinner. In either of these two situations the individual financing in this way has taken step to mitigate his risk, particularly in the case where the money to cover the loan is in an insured account. Most people that borrow money aren't in this category though and certainly not our OP. I still like paying cash. When I do, I have less accounting to do and accounting is a money and time waster.

The next common thing I hear is that "the interest is tax deductible and doesn't cost anything." Like a lot of things, that's partially true. The interest is an expense that comes directly off my bottom line, so if I made 50K and had $500 in interest deductions I now will only pay taxes on 49.5K. Now assuming I'm in the 25% tax bracket, spending that $500 in interest just saved me $125 in taxes. That's better than a stick in the eye but I'm still out $375 in interest expense. Although there are several here that are in higher brackets, most are in a much lower one, so the savings isn't quite so good. Despite a lot of that conventional "wisdom" that's out there, there is no way to make money on taxes by buying something. The tax savings can mitigate the purchase price to an extent, but it will never alleviate it. That include the ever popular home mortgage deduction. Don't take my word for it and don't take your accountants, do the math for yourself and see how it comes up.

There are a lot of companies use debt to grow, but there are many that crater because of it too. US Steel, Bethlehem Steel, Braniff, World COM, GM, Chrysler, Enron and countless others had debt, cratered and left massive trails of devastation in their wakes. I know lots of people that not only lost their jobs, but their retirements too when these companies failed. Bringing it down to a more personal level, there are restaurants, LCO's and other business on every street corner that went under and left their owners with huge debt loads. There are a lot of misconceptions about the amount of help available through bankruptcy. If you stop operating for any reason and you don't have debt, you have assets. Your equipment and and maybe your accounts are yours to sell and use the money for whatever purpose that you desire.

I know a young man around here that has his own lawn company. He has 3 crews, no debt, replaces most of his equipment every year,(mostly 21" stuff) and takes a one month vacation overseas somewhere every year. He has motorcycles and other toys - all paid for and NO worries. Sounds like a pretty good place to be to me.

About me: I'm 50 years old and semi retired. I haven't worked regularly since August of last year although I have picked up a few odd jobs since the first of the year. I have a substantial net worth, but I will still need to earn a little money for a few more years. I should be financially independent within the next 5 years. I was given this advice when I was young but instead I listened to the majority and I used credit "wisely". Had I followed this advice more closely, I would be fully retired now and traveling. Instead I'm thinking about starting a property maintenance service. One of the things I do is help people avoid debt. I know other that help people get out of debt, but I have a hard time doing that. Helping people get out when they're in over their heads is a heartbreaking gut wrenching proposition.

Got to go clean my trailer now.

Good luck,
Mike

P.S. I did lawn service when I was young and I didn't think there was anything better than an ice cold DR. Pepper on a hot Texas afternoon, but we drank it out of glass bottles. I still have good memories of that.

The difference between the depriciation is that you can depreciate your 9k truck/machine for a one time benefit and the machine you finance you depreciate over the life of the loan. That was my understanding through my accountant. The idea of financing is also provided that you would have the ability to do it either way. I am not saying to finance things you can't pay for. Most of the time when I finance things I COULD pay for them outright but I choose to play with the banks money and keep my own in the bank.(only for low rates also)

Weeded!
04-04-2010, 10:47 PM
The difference between the depriciation is that you can depreciate your 9k truck/machine for a one time benefit and the machine you finance you depreciate over the life of the loan. That was my understanding through my accountant. The idea of financing is also provided that you would have the ability to do it either way. I am not saying to finance things you can't pay for. Most of the time when I finance things I COULD pay for them outright but I choose to play with the banks money and keep my own in the bank.(only for low rates also)

The rate at which you are able to depreciate equipment for tax purposes is irrelevant of how it is paid for. You may want to clarify this with your accountant.