When BB mentioned quarterly taxes last night I flew into a flurry of paperwork and started working up actual numbers. The IRS guidelines say if you think you will owe more than $1000 in taxes, a quarterly report is required. Seeing as how the deadline for the first quarter is in about a week and a half or so, I thought I better find out if I needed to file one.
The good news is that I don’t.
The other news (not bad, just what it is) is that I finally sat down and actually figured out what sort of money I had been earning with my old lease carrier.
The breakdown was 16,265 miles driven, half of them paid, and an average of .27 per mile for all miles driven. I figured this for every mile since I did have to pay for fuel to push the rig down the road every mile, not just one-way. So the short answer is that I didn’t make much money leasing.
I’m chalking this up to the cost of furthering my education in trucking. When I said you don’t make a lot being leased, I meant it. Company drivers make around that wage as starting pay and don’t have the headaches of fuel and equipment costs and such. So what my actual pay was for the 3 months or so of driving was in the distinct negative zone once bills were paid.
Still, I’m glad I did it since it was the only way to figure out how this business works. And I paid close attention and did manage to learn a whole lot that you just can’t get from a tech school textbook.
Now that I’m seeing a future of hauling for direct customers, I have cut out a lot of grasping hands. No brokers to pay, so there’s a good 30% raise. No carrier to pay, there’s another 25%. Also I have complete control over which jobs I take, which is worth a lot considering there are places I really don’t care to go for various reasons. And places I really do want to go, so I can really target customers in those lanes.
Overall, my last run (the first without any grabby middleman hands) brought me 1.86 per mile after fuel, DEF fluid, and my motel costs.
What I needed to figure out is how much I need to run, and for how long, to pay off the truck, trailer, all the supplies I had to buy, my start-up costs, tags, insurance, and the whole shooting match.
So I looked at realistic miles I can expect to run this year. Ideally, I want to get at most, three trips a week and work 6 days out of 7. This is figuring fairly short runs, say 350 miles out since that’s what my one current customer’s runs average. If I get three of these a week, and let’s say one is a pick-up at the far end and the other two are hauls to the other end, I can get paid round-trip on the one pick-up and one-way on the other two. This puts me up to about 1400 paid miles per week with 700 more unpaid. That works out to about $3500 per week before expenses. After fuel and motels, figure on $2604.
Now here’s the catch… as a hot shot I can get about $2.50 per mile in this area. I’ve heard other hot shots are charging more, up to $3, and even $5 per mile. But I’ve also heard they sit a lot. My thinking is it doesn’t pay to be greedy and not get work. As it turns out, $2.50 a mile works great for me, particularly running truck-only jobs. If they want the trailer, I’ll have to up my rate some to cover the additional fuel required.
Anyway, back to my figuring.
Now I have to allocate some money out of every check for my expenses. So I broke them down and came up with what I need to pay off everything and the time-frames for the final payoff…
Truck bed 3000
Chains, straps, boomers, couplers, etc. 3000
Safety equipment 300
Office supplies & equipment 864
Truck & trailer maintenance 400
Tags, Fees, Licenses 5000
Taxes (Not much this year with all of the expenses, so we’ll call this $0 for the time being)
If I wanted to dedicate every cent I make to paying this all off as soon as humanly possible, and did it by getting truck-only runs just like the one I just had, it would take me 35,744 paid miles to come up with the cash to just pay everything off. That would mean if my 3 jobs per week would clear me $2604 after fuel and motels, all of my costs would be paid completely off by week no. 26.
Which is actually the point where I can say I’ll start making money instead of spending it. Kind of shocking, but that’s the reality.
In other words, if I can score enough customers to run all week, every week, and just pay everything on the costs, I should be at a break-even point by, let’s say November this year, just to be on the safe side. That gives me another two or three weeks to keep working on getting customers to get the number of runs per week I need.
Now, to be more realistic, of course I’m not going to pay out every cent I make on the bills since we also have living expenses that have to be met. Luckily, I don’t have to come up with it all right away.
For example, the truck payments are set up for 5 years. That’s the lion’s share of the costs involved. And the $41,000 figure I used is what the truck was priced, not what I owe on it, as I traded off my old Ford to get it. So my payoff is actually $28,000. Which drops the amount of money I actually have to pay out to $53,484.
But as you can see, you have to calculate in everything you spent, whether cash or trade, to figure what it actually costs to get set up.
So I have to prioritize what gets paid off first. Naturally, the credit cards are at the top of the list. The truck payment is second, along with insurance. And I have to look at the monthly cost and figure what I have to pay out, and then add the extra I can afford to get it paid down quicker.
So just looking at what I can run in the next 12 months as a best-case scenario, I’d be doing about $2600 after expenses per week. If I pay out half of that every week on bills, I’ll be at my break-even point about this time next year. Which works for me. Then next year I’ll have to set aside tax money for 2012’s taxes which will undoubtedly be higher than this year’s.
That leaves living expense money, enough to sock away some for a rainy day, pay all of the bills, and have something of a life as well as working. Which leaves me feeling pretty optimistic about this whole venture.
Now, remember, I’m figuring this as all best-case scenarios, not calculating in extra unforeseen costs, which will nibble away at the numbers I’m using, but also, I don’t really have the goal of paying everything off in x amount of months written in stone. Flexibility goes a long way toward minimizing headaches and frustration, so I expect some snafu’s along the way. I’ll just have to deal with that stuff as it comes up, but at least I have a plan of sorts…
With all of that in mind, I better stop this gabbing away and get busy lining up some work!