I'm debt free ,but looking to possibly add debt to upgrade

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noahosborne1982

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OK so I have a bucket truck two chippers two stump grinders a dump truck and five trailers .most my stuff is old I want to upgrade .should I sell some stuff and pay cash as I always have .(everything is paid for ) or should I take on some debt and buy some newer equipment ? Thanks for all the input in advance
 
Do you use both chippers, stump grinders, and all 5 trailers? Do you use the dump truck, or more often just the bucket truck? Better yet...will you loose efficiency if you sell the extras? (Sure, it is nice to have a small and a big one...but which do you use more, and how much more; and could you get by without both?) Do you have any cash?

My thinking (for example):
2 chippers + two trailers + $5000 = upgraded chipper.
2 chippers + two trailers + $3000 = upgraded stump grinder
Bucket truck + dump truck + $10,000 = upgraded bucket

If you don't have the cash for that, how about one at a time? Replace which ever is (A) going to cost you the most; or (B) upgrade will pay for itself with improved efficiency/safety the quickest.

If you don't have any cash, I'd be hesitant to borrow - calls dry up for 1 month and you are sunk. If you do have cash, I'd rather spend it than borrow...if you find yourself in need, you can look to borrow against something at that point (in other words, why borrow for what 'might' happen) - but you better figure out why you need it, and how next month is going to be different or, again, you are sunk.

Nobody who pays cash for everything goes bankrupt. There is a place for borrowing, but you had better prove why that is your best bet before doing it.
 
OK so I have a bucket truck two chippers two stump grinders a dump truck and five trailers .most my stuff is old I want to upgrade .should I sell some stuff and pay cash as I always have .(everything is paid for ) or should I take on some debt and buy some newer equipment ? Thanks for all the input in advance
I would only take a loan if that is the only way to get what you need to make money. If you have cash go that route first. The economy is very bad actually one day things could just stop and you will be hating that payment.
 
I've been in business for 26 years and what I've learned was to always take steps forward and you have to spend money to make money. I'll explain.
Whenever it came time to replace a piece of equipment, I replaced it with something better designed and more powerful. Never take a step to the side. Never replace something with something similar to what you already have. Do your research. When a machine or truck starts giving me signs I think of it as an opportunity to advance and be even more successful.
Each business has different goals and needs. Know what they are and refine your business to meet them. Do you want to build a business like your competitors or do you want to go far beyond them? Make your own path.
As far as spending money to make money goes, good equipment costs more yet makes you more money faster. So, if you have confidence as a business man and you see something that makes you say,"That is going to make my job easy." Get it and it will.
Do you have equipment that sits around unused? If it's sitting, it's not making money. If you had an investor tell you that you had a bunch of money sitting instead of growing, you would hire a new investor and reinvest. You want equipment that works all the time and does multiple tasks. You want to be diverse like an investment portfolio.
My business is a polished stone. When I retire, it will be a diamond.
Check my business out on facebook.
Glenn Gerasimek
Gerasimek Tree & Stump Removal, Inc.
 
I prefer to save up the cash, and get a loan when I can afford to pay cash for what I need, while setting that cash aside for the payments. That way I can put down whatever gets the best interest rate, I can always make the payments if things slow down, and I get another good mark on my credit.
 
I just upgraded bucket trucks because I was looking at putting six to seven grand in leveling cables, hoses etc for my old boom to pass inspection. So I went from a 95 F-800 to a 2001 fl 70 and from a 55 foot non over center to a 60 foot over center. I paid 8700 for the ford three years ago just sold it for 9500. Bought the new truck for 22,500 inspected by a third party. I am going to depreciate it out over five years and match the loan payment to the schedule. I am going into winter with 40 to 50 grand in my account but I am still making payments that's the only debt I have. My bank gave me 4.5 percent interest on it so it's not too bad. I just paid my payments up to April due to the expectation for things to slow up. I cannot believe how much more efficient I can be with this truck! I can remove trees with only one set up where with my old truck I would have had to do it with three.
 
Low overhead is what has kept us alive and happy all these years. Granted, we're a small operation, and we're not fancy, but keeping the bills at a level where a lemonade stand would cover the costs is a beautiful thing.

Nice to have nice stuff. Nicer still to only have stuff that is paid for.
 
I've been in business for 26 years and what I've learned was to always take steps forward and you have to spend money to make money. I'll explain.
Whenever it came time to replace a piece of equipment, I replaced it with something better designed and more powerful. Never take a step to the side. Never replace something with something similar to what you already have. Do your research. When a machine or truck starts giving me signs I think of it as an opportunity to advance and be even more successful.
Each business has different goals and needs. Know what they are and refine your business to meet them. Do you want to build a business like your competitors or do you want to go far beyond them? Make your own path.
As far as spending money to make money goes, good equipment costs more yet makes you more money faster. So, if you have confidence as a business man and you see something that makes you say,"That is going to make my job easy." Get it and it will.
Do you have equipment that sits around unused? If it's sitting, it's not making money. If you had an investor tell you that you had a bunch of money sitting instead of growing, you would hire a new investor and reinvest. You want equipment that works all the time and does multiple tasks. You want to be diverse like an investment portfolio.
My business is a polished stone. When I retire, it will be a diamond.
Check my business out on facebook.
Glenn Gerasimek
Gerasimek Tree & Stump Removal, Inc.

I checked out your FB. Nice stuff mang. How big a piece can that remote grapple cutter thing take?
 
There is a Section 179 tax stimulus depreciation deduction for 2014 you could check out if you go that route.

Yes, and I never could figure out how some of these guys on here manage their tax liability without having the depreciation of new equipment. You hear claims like "All my stuff is paid for and I ain't buyin' nothing" There is only two explanations...they really don't make enough money to amount to chicken sh!t or they are messing with the books somehow.
 
Since 2000 I set aside money every month for new equipment. Sometimes I use it to buy items cash other times I use it to make payments. I tend to like to buy cash but I'm not afraid to take on payments as I've been making payments to myself in the equipment account for so long.
 
Never never never mtg. The property, where your pillow stays at night.
You can wind up under a bridge that way.
N
 
I remember some years back when I had just about everything paid off (for a short bit). After a while I got so bored washing and greasing and maintaining the same old stuff. I thought, “what’s next, do I just sit around and wait to die now”?

Well I’ve got plenty to keep up with these days. Thankfully business has been good lately, so not a problem. If I told some of these guys what my payments are now, their jaws would probably hit the keyboard. Lol. but I couldn’t imagine doing this stuff without any one of my sweet, sweet, babies at this point.

And yeah, definitely beats giving it to the man.
 
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