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Greg's post made me think of why I went with a large truck. If Campbell owns a subchapter S I have some advice which I posted over in the sandbox a while back.
At the time I had a '96 STS that the trans went out on at 96k that prompted a quick fix and was traded in on something new. I did not have a race car at the time but I knew it would happen in a year or two.
First of all try to only borrow money when it will make you money.
For example: I wanted to buy a $45k truck and was fortunate to also have that much in some investment making 6-7% a year after taxes. The manufacturer was offering financing at 2%. As a bonus the truck was purchased by my company and since it’s over 6000# qualifies for the Section 179 depreciation schedule (100% and now). As a sub S that deduction rolls over to me against earned income. If you're making some decent bucks Uncle Sam can get 50% of it if your stupid about it.
So instead of paying for the truck out right I take Ford up on their offer, borrow the $45k at 2%, and make 4-5% just by doing it. Plus, I keep the $22.5k that Uncle Sam wanted but won’t get due to the 179. Is that beautiful or what? FWIW: the flat tax or fair tax - screw both of those fantasies!
It’s not always about how much you make as much as it is how much you get keep. If you're self employed buy a truck over 6000# and pay half price.
Tom Sprecher
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