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How much debt is safe to carry?

Discussion in 'Business Operations' started by 32vld, Jul 5, 2013.

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  1. larryinalabama

    larryinalabama LawnSite Fanatic
    Posts: 17,002

    Good example of how "broke" people operate.
  2. seabee24

    seabee24 LawnSite Senior Member
    Posts: 619

    Ok I'll re-phase it. If something happened, and the money stopped coming in for any reason, could you make the payments and ride out the storm until the money tree bloomed again or until you could sell it off? Could be 6 months could be 2 yrs everyone is different.

    Where the bad debt comes into play is when you fianance a mower and reley on the money it produces to make its own payments. If you had a dought like I had last year, could you still make the payments for 3 Months mowing less than 10% of your route? Or would you find your self in trouble quickly?
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  3. 32vld

    32vld LawnSite Gold Member
    Posts: 3,984

    If I needed to buy a $9,000 mower and had $10,000 cash and could buy the mower 0% interest a instant response would be great idea. I get to hold onto my cash. Have the cash to use if paying the loan becomes a problem.

    Thinking it through I would hold off buying that mower because that $1,000 left out of the original $10,000 ear marked to cover the mower purchase would not be enough of a cushion to get by on for any amount of time or large enough to handle most emergencies.

    I just bought a new open 5 x 10 trailer today. Used the credit card. Because I do not like to walk around with that much cash. Though I will be moving over the cash set aside for buying a trailer from the savings account to the checking account and paying off the trailer in one shot.
  4. Realslowww

    Realslowww LawnSite Bronze Member
    Posts: 1,527

    In this fake economy I think you are better off paying cash on slightly used stuff and let somebody else take the big hit, whatever you do try to get your house paid off before you go in more debt.

    The whole system is rigged and America should have collapsed long ago.
  5. larryinalabama

    larryinalabama LawnSite Fanatic
    Posts: 17,002

    I credit card a lot of stuff, I also pay the entire balance off monthly.
  6. larryinalabama

    larryinalabama LawnSite Fanatic
    Posts: 17,002

    A paid for house is the best investment you can make for yourself and for your business.

    When I started Lawnsite there was only a couple of us debt free fellers, now it seems to be about half. The fellers that asked me what "rock" did you crawl out from under don't post anymore.

    As far as America collapsing, in a very real sense it already has.
  7. vegandude

    vegandude LawnSite Senior Member
    Posts: 450

    If it has a motor, I won't buy it used as I don't trust other people's maintenance. We also buy quite a few things on the card and then pay off immediately. Sometimes you can get your warranty doubled, if you have a problems with a company, sometimes the credit card company will intervene. I passionately hate buying anything on credit but sometimes it is very convenient.
  8. 32vld

    32vld LawnSite Gold Member
    Posts: 3,984

    I prefer to buy new my autos and equipment new and have a guarantee. I also keep my autos over ten years. 2001 GMC Suburban 113,000 and a 2005 Jeep Unlimited 87,000. They both should last a long time.

    Hope I have the cash to buy my next auto. Either a Basic model suburban or basic 1500 crew cab. That means I have to save about $3,000 a year for the next ten years.

  9. Stars & Stripes Landscaping

    Stars & Stripes Landscaping LawnSite Member
    from CT
    Posts: 246

    I think Cody S. told me best, if I can afford a mower/equipment year round with no problems even if I lose the business then why not take the 0% Interest for 48 months?
  10. RSK Property Maintenance

    RSK Property Maintenance LawnSite Bronze Member
    Posts: 1,486

    i have debt, its not a good thing, but its nothing too crazy, i should be able to pay it off in a few months. having my dump trailer vs. not having it and saving that 180 dollars a month is crazy. my back would aching every night without it, i would turn down lots of jobs due to not having it, vs. now i can take those jobs on because i have the dump trailer. my total bills for the whole month can and are paid with half of what i make in a single week doing just my lawns. so any other work my customers have me do, like shrub pruning, mulching, brush clearing, ripping out shrubs, anything. is extra and a bonus. so i'd say that's a safe amount of debt to be in. its not good debt but its already there. I pay for all my gas, diesel, and supplies every month with cash only. I have a credit card that does give me 3 percent cash back which i could be using for that stuff. maybe i'll start doing that in a month or so once that card is payed off, so i know i can pay it in full each month.
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