More money as a contractor?

[mdshunk]

Just curious what I "should" be taking home personally in your opinions.

I don't know how much you "should" be taking home, but 12-15% of gross sales is the best number I can give you from my perspective.

 

[emahler]

You forget that your truck payment includes interest usually 6-12% depending on the bank.Putting money in the bank earns 2-3%.By not paying off your note and banking the money you are loosing the difference between what the bank pays and what they charge 4-10 %.

what's your ROI on money you invest in your business? how much will it cost you when you lack the working capital to take on a project that will boost your business? or when a great deal comes along for material, tools, or other equipment? these have to be factored into the equation...

how much revenue could be generated if you spent that money on marketing and advertising? training your employees?

 

[Rewire]

what's your ROI on money you invest in your business? how much will it cost you when you lack the working capital to take on a project that will boost your business? or when a great deal comes along for material, tools, or other equipment? these have to be factored into the equation...

I have five clear titles to trucks I can walk into any bank and walk out with a loan using these vehicles as collateral.If I had 5- $300.00 payments that would be a $1500.00 monthly obligation that a bank would look at if I needed to borrow cash for funding.With my trucks paid for I have $1500.00 I can use to build my business and instead of a liability the trucks are an asset the bank can consider when looking at loaning my business extra capital.When you stop thinking like an employee and start thinking like a business owner you realize that having the ability to borrow capital is more important than actually borrowing the money.

 

[chris kennedy]

Just curious what I "should" be taking home personally in your opinions.

Scrap copper and all your fingers and toes.

 

[aline]

the money is secondary the fact is I love what I am doing

There's nothing wrong with loving what you do.
There's also nothing wrong with making a lot of money doing something you love to do.

Just ask Tiger Woods.

 

[petersonra]

There's nothing wrong with loving what you do.
There's also nothing wrong with making a lot of money doing something you love to do.

Just ask Tiger Woods.

or for that matter making a lot of money doing something you don't especially like. Its just pretty rare that it happens that way.

 

[emahler]

I have five clear titles to trucks I can walk into any bank and walk out with a loan using these vehicles as collateral.If I had 5- $300.00 payments that would be a $1500.00 monthly obligation that a bank would look at if I needed to borrow cash for funding.With my trucks paid for I have $1500.00 I can use to build my business and instead of a liability the trucks are an asset the bank can consider when looking at loaning my business extra capital.When you stop thinking like an employee and start thinking like a business owner you realize that having the ability to borrow capital is more important than actually borrowing the money.

then obviously you realize that your trucks are not assets...they are liabilities...costs of doing business.

what does it cost you to borrow capital? if, as in your example, 12% on truck loan is the best you can get, what percentage do you think you will get on a capital loan?

if that's the case, factor your A/R's, it will cost you less and you'll have the cash you need.

in addition, paying cash doesn't help your credit....take the loan at 12% and pay it off in 3-4 months for each truck...suddenly you don't need the collateral to get the loan...

and for the record, we carry a revolving line of credit larger than not having a $1500/month truck payments will ever secure for us.

Buy equipment that you can't rent. Rent equipment until the rental fees surpass your yearly costs (including operating and maintenance) for that equipment. Trac lease anything you can buy for cash or at 0%...don't ever pay cash for a 0% finance.

and learn where your money makes you money....the trucks should pay for themselves. Having capital on hand to invest in material futures, expanding operations, purchase investment property (that increases in value)

but to be proud that you put large sums of capital into items that loose 10% of their value the 1st time you use them...well that makes no sense...

and if you ever accuse me of thinking like an employee again, i'll get downright angry

 

[Rewire]

what does it cost you to borrow capital? if, as in your example, 12% on truck loan is the best you can get, what percentage do you think you will get on a capital loan?

Paying 12% could be due to the fact it is an older vehicle just to toss that out,the point I was making is that any interest you pay on a loan is usually more than you can get from deposited money

in addition, paying cash doesn't help your credit....take the loan at 12% and pay it off in 3-4 months for each truck...suddenly you don't need the collateral to get the loan...

Not paying can hurt more

and for the record, we carry a revolving line of credit larger than not having a $1500/month truck payments will ever secure for us.

and just for the record I have the deed to my home as well as the titles for 5 trucks

don't ever pay cash for a 0% finance.

just make sure you read the small print

but to be proud that you put large sums of capital into items that loose 10% of their value the 1st time you use them...well that makes no sense...

I have a 2005 grand caravan I purchased in march of 2005,it was bought new and returned to the dealer because it did not have stow and go seats the people traded for a van that did.with no blue book for 2005 they sold it to me at 2004 book .These are the deals I make let some other fool loose 10%.

and if you ever accuse me of thinking like an employee again, i'll get downright angry

I was just making a statement,if it made you feel guilty I am sorry

 

[emahler]

Paying 12% could be due to the fact it is an older vehicle just to toss that out,the point I was making is that any interest you pay on a loan is usually more than you can get from deposited money

but you will almost always get a better rate on a truck loan vs. a capital loan...without tying up any collateral...

Not paying can hurt more
and just for the record I have the deed to my home as well as the titles for 5 trucks
just make sure you read the small print

ditto here, less 2 work trucks that are still being paid...one is trac lease, one is a 0% finance deal...

I have a 2005 grand caravan I purchased in march of 2005,it was bought new and returned to the dealer because it did not have stow and go seats the people traded for a van that did.with no blue book for 2005 they sold it to me at 2004 book .These are the deals I make let some other fool loose 10%.

good for you...but there is a huge difference is personal finance and business finance...personally, i buy vehicles that come off 2 yrs leases...i find them to be the best deals for me. business wise, different theories.

I was just making a statement,if it made you feel guilty I am sorry

guilty for what?

 

[hardworkingstiff]

Works for me too.

I would also like to add this country would not be in a recession if most Americans had the same attitude.

Count me a believer!

 

[frogneck77]

Thanks for all the replies-alot of good info floating around out there.

 

[quogueelectric]

I paid half of my truck in cash and took out a payment for the balance and I just figured the other day it is costing me about 1000 a month to operate but being that I front loaded the payments It doesnt seem that bad but in fact it is. That doesnt include gas figured on a four year truck life. Happy I got the 5 cylinder rather than the big diesel.

 

[ptonsparky]

The biggest thing is to pay yourself something. I tried the dumping everthing back into the business and did not like the lack of cash in wallet. Can't take kids to a movie with all your money setting in a paid for truck.