- This driver helps rookie truckers learn the ropes
- Home-schooling in a truck means the country is a classroom
- This driver sees the world through Google Glass
- A career trucker brings his tales of the road to people in hospice
- How driver Paul Sedlak finds motivation to reach his fitness goals
- I Love Trucking: More than a job, driving is a way of life
- Big Rig Books: Driver delivers books to underprivileged kids
- Driver Chris Jackson captures moments of beauty on the road
- Trucking Couple: Why June & David got hitched
- Owner-operator Fritz Elmhorst puts his competitiveness to good use
The Impossible Dream
The warm weather of summer always leads to the same question eventually: “Where are we going on vacation?” For a vast majority of trucking owner-operators and lease operators, taking extended time off is out of the question.
Or is it?
With some planning and forethought, taking that dream vacation to Hawaii, Cancun, a visit with the kids to see “the mouse,” or that long-awaited family or class reunion can be a reality. So what’s the secret?
You use the same plan and method you use to set up your repair reserves, emergency funds or tire replacement account. With planning and discipline, by this time next year you can be prepared to take that long-desired extended vacation.
Know what it’s costing you to operate your trucking business day-to-day. For the purpose of your vacation goal, you need to know your daily fixed costs. These are the business expenses that occur when your truck is parked. They would include lease or truck payments, cell and business phone, business insurance, base plate, permits, FHUT, accounting fees, health and disability insurance premiums and your salary or draw for driving the truck. By knowing these figures and calculating them from an annual total to a daily total (completed by dividing your annual fixed cost total by 365), you now know your daily fixed costs.
Determine the number of days you will be on vacation.
Add 14 additional days (seven days before your vacation and seven days after its end) to compensate for the loss of hauling revenue from having to be home on a specific date to start your holiday, and to “get back into the cash flow groove” upon your return from that holiday.
Multiply the total number of vacation days, including the 14 additional ones, by your daily fixed costs. This total is the amount of cash reserve you will need in your business savings account at the time you plan to take your vacation.
Take the total of this cash reserve, add it to your annual fixed cost figure, and divide by 365. This new total will be your new daily fixed cost. This is the amount you need every day, 365 days a year, to pay all your fixed business expenses, personal home expenses and provide you with a Vacation Cash Reserve. Please note this cash reserve is solely for covering all your truck business expenses and personal salary or draw while on vacation and while getting back into the swing of the business upon your return. The funds needed for the vacation itself (plane tickets, hotel, etc.) requires a completely separate savings plan, which is handled in the same manner to cover those expenses.
Doing the Math
Here’s an example of how the plan would work
• Your Annual Fixed costs are……………$36,500
• Your Annual Draw or Salary is…………$50,000
Total Annual Fixed Costs…….…$86,500
• Divide Annual Fixed Costs by……..….365 Days
Fixed Cost per Day……………………$237
• Number of days on Vacation + 14…..24 Days
(10 days’ vacation + 14 “get back into the cash flow groove” days)
• Multiply Total Vacation Days by Fixed Cost per Day ($237) to get Vacation Cash Reserve needed…$5,688
• Add the Vacation Cash Reserve to the previous Total Annual Fixed Costs ($86,500) to get
The New Total Annual Fixed Costs
including the Vacation Cash Reserve….$92,188
• Divide the New Annual Fixed Cost by………….365 Days
• The New Fixed Cost per Day required………..……$ 253
• Less the difference from the old Fixed Cost……$ (237)
to get the Addition to Fixed Cost per Day….…$16
which is what is needed to save per day to be able to take
a paid vacation next year.
Amount to set aside each week…………..….$112
This is the amount you’d add to your weekly break even point to be sure you meet your vacation savings target.
These are manageable amounts of cash, and with due diligence and some dedication you can cover the cost of owning your truck and the money you need at the house so you can truly enjoy a worry-free vacation. For what amounts to pocket change, you can create memories that don’t involve the truck. And I’m sure your significant other will appreciate that.