How to protect yourself financially as pandemic hits U.S.
Q: Due to the coronavirus, the economy apparently is going to take a big hit as the trucking business is slowing considerably. How can I protect my financial situation from the pandemic since we don’t know how long it is going to last?
A: You need to make sure you have enough money to cover at least six months of your bills. If you have excess cash and the stock market is still down certain stocks may appear to be on sale. During times like this you might consider disability insurance to protect future income. Talk with your insurance or stock broker for advice.
Q: My equipment keeps breaking down. It seems like it’s getting more time in the shop than on the road. I think it’s time to replace it. Should I buy a new truck or lease?
A: Once you have decided what you want and know the cost, you have to decide whether to buy or lease.
If you want to purchase your equipment, decide on the amount of down payment you can afford which is acceptable to them that will then give you the amount to be financed. Shop around for the best financing available. The following are common finance sources:
- Dealers – Typically they will provide financing.
- Banks – Some banks are business-oriented. If your bank does not loan on equipment, find a bank that does and consider changing banks.
- Credit Unions – Always a source for good financing.
Obviously, compare the different finance offers. You may decide to alter the size of your down payment. As you can see there are various options for you to pursue. You have to decide what works best for you and what you can afford.
Q: What are the advantages if I lease the equipment?
A: Leasing the equipment can offer a lower monthly payment and minimal if any down payment. There are open and closed end leases. If you like to stay in newer equipment, leasing may be for you. You can get into a newer rig every three or four years easier than if you purchased the equipment.
Q: Should I pay cash for the equipment I purchase?
A: No. Your dollars inside the plan won’t be working for you and you might miss out on long-term tax free compounded earnings. LL
This article has been presented by PBS Tax and Bookkeeping Service, a company which has been providing income tax and bookkeeping services to the trucking industry for over a quarter century. If you would like further information, please contact us at 800-697-5153. Visit our website at www.pbstax.com.
Everyone’s financial situation is different. This article does not give and is not intended to give specific accounting and/or tax advice. Please consult with your own tax or accounting professional.
Read last issue’s Tax Tips column here.