Sanity Check - Kioti

[prof fate]

A good example would be a backhoe attachment.

If I had it, would I use it? Of course. I'd get lots of use from it i'm sure.

BUT for my tractor it's $7500. I've needed hoe work 4 times in 20 years...I can hire that done for alot less than $7500. Or rent equipment.

Yes, the hoe will add to the resale price of the tractor, maybe $5k? 4K? So the REAL cost of owning it for a decade might be $3000, plus storage, maintenance, insurance, repairs. $300 a year isn't bad - BUT that's not what I have to actually PAY to get it...It would be $120/month (1400/year) for the 6 years of the loan.

it's not worth $1400 a year to me.

YMMV of course.

Good point I always get a chuckle on the resale portion, while its a consideration its a smoke and mirrors sales tactic. Like you said you can pay 30% more for brand X then brand Y, but brand X will only bring you 20% upon resale so you lost 10%. End of the day paint color may add to sell-ability which is worth something, but sell-ability and resale value are two different things. If you look at 5-10-15 years down the road at selling, sell-ability could be different but dont think youll be selling brand x for any more than brand y and least in comparing it to relative purchase price.

Another thing is people get to wrapped up into re-sale for a home purchase or private use, unless your running a business where depreciation, equipment maint, assets all play a part. For private use its way over thinking. While nobody wants to buy a 30k machine and have it worth 5k in two years, but in reality it doesnt matter. You buy that 30k machine, you ran it you maintained it, those are all sunk cost that you will never back, you just want. Its not going to matter 10 years down the line that you got 2k more in resale with one brand vs the next, as you lost money on it anyways, but even that doesnt matter as you bought machine to accomplish a task and it did it.

 

[nards444]

A good example would be a backhoe attachment.

If I had it, would I use it? Of course. I'd get lots of use from it i'm sure.

BUT for my tractor it's $7500. I've needed hoe work 4 times in 20 years...I can hire that done for alot less than $7500. Or rent equipment.

Yes, the hoe will add to the resale price of the tractor, maybe $5k? 4K? So the REAL cost of owning it for a decade might be $3000, plus storage, maintenance, insurance, repairs. $300 a year isn't bad - BUT that's not what I have to actually PAY to get it...It would be $120/month (1400/year) for the 6 years of the loan.

it's not worth $1400 a year to me.

YMMV of course.

kind of my point with some of this stuff and attachments, business or farm use is different or something you use monthly or more. I thought about the hoe as well but its 7k, i can rent an ex for a week for less than a grand, which ultimately will do the job better. In 12 years of home ownership I would have need that hoe once, thats pretty pricey. better yet I can get a guy to come out and work for a day on an ex for probably less than a 1000 bucks.

Everybody is different and has different needs. I just think there are those that use this stuff all the time think everybody else does, which simply isnt true.

My buddy has 100 acres, and they have the brush hog, finish mower, and brush hog, box blade, I mean your talking probably 20k worth of crap, sure they have used it but not all of the time, other people use it more than they do, which Im not complaining because I do too, lol.

 

[PEJ5]

As some of us get older we have money invested for future use in retirement. Most investments do well, others lose a little, even so, most of the initial capital is still there. In the case of a backhoe, it makes the rest of the tractor more valuable for resale and prices 10 years out will have increased so much that the 2029 used price will be close to the 2019 purchase price. Sounds like a good-enough return on investment. Works in theory except I would likely never sell!
I almost talked myself into buying one, except they are $10K in Canada.
Maybe we need to start a regional implement sharing Coop. Would someone like to take $1K off the cost of their backhoe for 6 months?

 

[rScotty]

I've bought a lot of tools over the years, and the ones that stayed on to become a part of our rural lifestyle are the tools we bought for quality, not price. I'd like to say that was a conscious decision, but it wasn't. It's only in looking back that I am finally realizing how true it is.

Several posters talk about the economics of investment. That hits home, because we keep good enough records so that I'm absolutely positive that for what I've spent in backhoes attachments alone over the past 50 years I could have saved substantial dollars by simply hiring the work done. No question about that. In fact, I refuse to look too closely because the same probably applies to a lot of our tractor work.....half of it at least.

All I would have missed would be the fun of planning these jobs followed by the enjoyment of doing them myself at my own convenience in my own way on my own land and being able to share these projects with friends and family.

When money is scarce we generally fix up used equipment to work. That's easy to do; anyone who has the need can do the same.
rScotty

 

[Monster5601]

dig a 10' x 8' x 8' area,

I'm not sure what you mean by this but a backhoe isn't ideal for digging out a hole (if that is what you are doing) because of the limited swing of a backhoe, think excavator.

 

[nards444]

As some of us get older we have money invested for future use in retirement. Most investments do well, others lose a little, even so, most of the initial capital is still there. In the case of a backhoe, it makes the rest of the tractor more valuable for resale and prices 10 years out will have increased so much that the 2029 used price will be close to the 2019 purchase price. Sounds like a good-enough return on investment. Works in theory except I would likely never sell!
I almost talked myself into buying one, except they are $10K in Canada.
Maybe we need to start a regional implement sharing Coop. Would someone like to take $1K off the cost of their backhoe for 6 months?

Not to get into the nuts and bolts. Inflation raising the price of something you bought 10 years ago is not an investment its actually a loss, need to read up on inflation and depreciation. For example if that hoe cost you 7k new, 10 years later its worth 4k and inflation amounted to 10%, so that hoe actually sold for $4400, you didn't make $400 you you lost 400, you actually lost 50% on the item. Bottom line is inflation or something being worth more in 10 years does not mean more money, only way inflation potentially benefits you is if you were to buy something new so under market. Equipment is not an investment unless you use it to make money. If you like the equipment and like to use it and its worth it to you that's all that matters, its just not investment of any kind.

 

[nards444]

I've bought a lot of tools over the years, and the ones that stayed on to become a part of our rural lifestyle are the tools we bought for quality, not price. I'd like to say that was a conscious decision, but it wasn't. It's only in looking back that I am finally realizing how true it is.

Several posters talk about the economics of investment. That hits home, because we keep good enough records so that I'm absolutely positive that for what I've spent in backhoes attachments alone over the past 50 years I could have saved substantial dollars by simply hiring the work done. No question about that. In fact, I refuse to look too closely because the same probably applies to a lot of our tractor work.....half of it at least.

All I would have missed would be the fun of planning these jobs followed by the enjoyment of doing them myself at my own convenience in my own way on my own land and being able to share these projects with friends and family.

When money is scarce we generally fix up used equipment to work. That's easy to do; anyone who has the need can do the same.
rScotty

We all do things because we want and because we enjoy it. Dont take me wrong in what I am saying, not saying people are dumb and stupid for what they buy etc etc. My point was to merely point out the financial implications that is all. Reality is a lot of people do things or buy things because they think they are saving money, and it is simply not true. Theyll buy equipment for 20k use it twice a year and think man I saved money because I didnt have to hire somebody, the problem is the reality is much different.

Most people dont like to hear it, but it is getting to the point renting everything is a much wiser choice at least financially. Actually had an argument with a buddy about buying a truck vs leasing, he said youll always have a payment I wont. I said I dont care Ill save money you wont, didn't believe me. So we laid it out, we both bought 50k trucks there abouts. He had a 6 year note and with interest would end up paying 55k for that one truck that he planned on keeping for ten years. Ive been averaging 450-500 per month for leases, over 10 years I paid or will pay around 60k. My 60k spent means no maint and i get three new trucks in that span, he gets one and has to pay maint, of which over ten years new tires, and breaks at least once, battery, and probably exhaust. Best case scenario is he breaks even with me, reality is he probably spends more.

We all buy what we want sometimes because this is America and we can, no issues with that. I just have a hard time with some comments where people actually believe things are investments or are saving money, when it simply isnt true.

 

[rScotty]

I'm not sure what you mean by this but a backhoe isn't ideal for digging out a hole (if that is what you are doing) because of the limited swing of a backhoe, think excavator.

Right, because backhoes only swing 180 degrees, I always have to plan out in advance how to do a backhoe project - but it can usually be made to work. Sometimes it's kind of awkward compared with an excavator - and backhoe projects often need to have the spill pile moved during the dig....but that's easy enough with the loader.

 

[Steve1300]

The use of a backhoe for what I have needed is a sure plus. From digging out a drain field, digging up tree stumps, and something as simply as using it with a hydraulic thumb to move some pieces of heavy concrete has paid dividends in what it has saved my back. Then, there have been friends who needed a little backhoe work, so I was able to provide it to them as no cost to them. Yeah, I'd buy it again just because it gives me freedom to plan and to do. I never got it to be a money-maker.

Would I rather have an excavator? Yep, when I am digging. Then I'd need a tractor for everything else I do.

 

[DK35vince]

Most people dont like to hear it, but it is getting to the point renting everything is a much wiser choice at least financially. Actually had an argument with a buddy about buying a truck vs leasing, he said youll always have a payment I wont. I said I dont care Ill save money you wont, didn't believe me. So we laid it out, we both bought 50k trucks there abouts. He had a 6 year note and with interest would end up paying 55k for that one truck that he planned on keeping for ten years. Ive been averaging 450-500 per month for leases, over 10 years I paid or will pay around 60k. My 60k spent means no maint and i get three new trucks in that span, he gets one and has to pay maint, of which over ten years new tires, and breaks at least once, battery, and probably exhaust. Best case scenario is he breaks even with me, reality is he probably spends more.

You seem to have left out your buddy's truck is still worth something for trade or sale towards his next vehicle.
I've owned my pickup for 23 years, and our cars a 2005. Haven't made a vehicle payment in years.

 

[coobie]

You seem to have left out your buddy's truck is still worth something for trade or sale towards his next vehicle.
I've owned my pickup for 23 years, and our cars a 2005. Haven't made a vehicle payment in years.

And Don"t forget the lease down payment of maybe $3,000 bucks every time and the lease insurance just in case you scratch it.LOL.

 

[nards444]

And Don"t forget the lease down payment of maybe $3,000 bucks every time and the lease insurance just in case you scratch it.LOL.

Lease insurance if you so choose to get it is like 300 bucks, often times its thrown in. I dont do down payments, doesn't make sense, as you total the truck tomorrow you lose that money, just gets rolled in, I only pay around 450-500 bucks, so really doesn't matter.

In the end the lease down payment is no different than a down payment when purchasing, you either put it down and if you dont it gets spread across the term, so its not new or extra money. The total lease amount is the same whether you do lease down payment or not.

 

[nards444]

You seem to have left out your buddy's truck is still worth something for trade or sale towards his next vehicle.
I've owned my pickup for 23 years, and our cars a 2005. Haven't made a vehicle payment in years.

Your missing the point and being short sighted. Im also not comparing this against somebody that owns vehicles for 20 years plus. Average time someone keeps a vehicle is only like 7 years.

So back to my scenario I am looking at vehicle ownership in 10 year increments which is pretty logical given the way people own them. And yes my buddy would have something he owns to trade or sell after 10 years you are right. On average of 15k miles a year for 10 years, that vehicle has well over 150k on it, I would guess hes maybe looking at 10-12k in equity. But over those ten years hes also got two sets of tires he had to replace, a few brake jobs, exhaust, battery, probably a front end job. Thats just on wear items, this doesnt include any break fix that will happen. End of the day any equity he had at after 10 years was probably swallowed up by maint over those ten years. Bottom line we pay roughly the same, Im driving new all the time without having to fork over money for fixes, he is not.

 

[rScotty]

We all buy what we want sometimes because this is America and we can, no issues with that. I just have a hard time with some comments where people actually believe things are investments or are saving money, when it simply isnt true.

You seem to have left out your buddy's truck is still worth something for trade or sale towards his next vehicle.
I've owned my pickup for 23 years, and our cars a 2005. Haven't made a vehicle payment in years.

It sure would be a simpler world if there was one right way and one wrong. But renting versus owning is just like in politics or religion - there's not one simple right answer.

As I see it, for short term use it makes sense to rent or lease. For long term owning is better.
Renting/leasing is fast and easy, but you give up things too.

Generally, the shorter the time period, the more it favors renting/leasing. And the longer term favors ownership.
Choose a tool wisely, take care of it, & keep anything long enough and the watch the value go up, not down.
There's no reason good tools can't be good investments - all it takes is buying quality and having a bit of luck.
Same as anything else....
rScotty

 

[nards444]

It sure would be a simpler world if there was one right way and one wrong. But renting versus owning is just like in politics or religion - there's not one simple right answer.

As I see it, for short term use it makes sense to rent or lease. For long term owning is better.
Renting/leasing is fast and easy, but you give up things too.

Generally, the shorter the time period, the more it favors renting/leasing. And the longer term favors ownership.
Choose a tool wisely, take care of it, & keep anything long enough and the watch the value go up, not down.
There's no reason good tools can't be good investments - all it takes is buying quality and having a bit of luck.
Same as anything else....
rScotty

Agreed 100%. If you want to keep something for 20-30 years buying can absolutely be great. I was only trying to interject the devils advocate into the equation, all to often people see things in terms of buying vs renting, loan vs cash although you wont change any minds many do not truly understand the Xs and Os of what they are doing. For what its worth I have done everything, rent, buy, cash and loan and I have learned lessons from each method. I just have a hard time with people thinking inflation makes them money on something they bought and other like comments, as it truly shows a lack of understanding.

Where I disagree is that tools are investments if your looking at it in it's truest sense. Investments typically make you money when the dust settles, now I would say they can be a personal investment of sorts and save you money, but rarely will somebody privately purchase say a 10k tool and make money on it, most will probably either break even or lose money on it eventually.

 

[rScotty]

Yes, looked at purely as an investement it is rare to make money on a tool in even a modestly inflationary economy. You have to get your value out of them some other way than financially.

For example, I began like most of us do as a poor kid just buying cheap tools as I needed them. But later - about 1975 - I consciously switched to "investment quality tools" with the expectation of keeping them for a lifetime.

That's worked out real well as far as the tools go (including trucks & tractors). Along with luck, I've had good service, pride of ownership, and surprisingly few repairs.

But as you say, from a strictly investment perspective it doesn't often work. A little bit of online inflation arithmetic will show that for every 1000 dollars spent in 1975, I'd need to get almost 5000 dollars selling that tool today - and that's just to break even. It does happen; even to me. A few tools actually did go up in value more than that. But most do not.
rScotty

 

[nards444]

Yes, looked at purely as an investement it is rare to make money on a tool in even a modestly inflationary economy. You have to get your value out of them some other way than financially.

For example, I began like most of us do as a poor kid just buying cheap tools as I needed them. But later - about 1975 - I consciously switched to "investment quality tools" with the expectation of keeping them for a lifetime.

That's worked out real well as far as the tools go (including trucks & tractors). Along with luck, I've had good service, pride of ownership, and surprisingly few repairs.

But as you say, from a strictly investment perspective it doesn't often work. A little bit of online inflation arithmetic will show that for every 1000 dollars spent in 1975, I'd need to get almost 5000 dollars selling that tool today - and that's just to break even. It does happen; even to me. A few tools actually did go up in value more than that. But most do not.
rScotty

Right makes sense. I went through the same process on simple things buying the cheap drill, now I mid mid grade or high end, was tired of replacing cheap stuff, which ultimately saved me money and frankly time.

I see the same inflation mixed of math on car forums. You got guys talking about keeping cars as investments(which by the way can be true) and they point back to buying early 70s muscle cars for 4 grand and selling for 40-50k, but they fail to realize that to break even they had to sell that car for 20-25k in todays money and forget the 20k they put into it restoring, now while theyre are people making money this way its just not the average joe blow doing it.

Again I go back to the fact if you want something and works for you, I have no issue with it, I do it to. Only trying point out it might be worthwhile evaluating the situation from a 360 perspective, somethings just arent what they seem

 

[paulfun9]

We all do things because we want and because we enjoy it. Dont take me wrong in what I am saying, not saying people are dumb and stupid for what they buy etc etc. My point was to merely point out the financial implications that is all. Reality is a lot of people do things or buy things because they think they are saving money, and it is simply not true. Theyll buy equipment for 20k use it twice a year and think man I saved money because I didnt have to hire somebody, the problem is the reality is much different.

Most people dont like to hear it, but it is getting to the point renting everything is a much wiser choice at least financially. Actually had an argument with a buddy about buying a truck vs leasing, he said youll always have a payment I wont. I said I dont care Ill save money you wont, didn't believe me. So we laid it out, we both bought 50k trucks there abouts. He had a 6 year note and with interest would end up paying 55k for that one truck that he planned on keeping for ten years. Ive been averaging 450-500 per month for leases, over 10 years I paid or will pay around 60k. My 60k spent means no maint and i get three new trucks in that span, he gets one and has to pay maint, of which over ten years new tires, and breaks at least once, battery, and probably exhaust. Best case scenario is he breaks even with me, reality is he probably spends more.

We all buy what we want sometimes because this is America and we can, no issues with that. I just have a hard time with some comments where people actually believe things are investments or are saving money, when it simply isnt true.

I just did the math on maintenance and repair for a truck I have owned for 16 years and the numbers dont add up as you suggested..
I got free lifetime inspection on the purchase and it has only taken tires, brakes since brand new. Sorry but my finance charge is zero and there have been zero break downs.
Considering there is still a resale value worth more than than the cost of a years lease at your 450 cost (using the lower due to year) but is actually most likely between the 2 and 3 year range due to condition and desire ability of a good diesel. Your numbers just dont compute as being better.
Now understand I used the maintenance cost based on 16 years not ten so this should have given your system an advantage but it doesn’t

Now let’s ´ talk mileage and cost per?
Want to figure out your actual cost per mile and compare it to real world numbers where people actually keep a vehicle that does not give them problems?
The real cost of ownership is actually in miles driven not years owned and every lease I see has a mileage limit. For the ability to drive more miles you pay more keeping the cost yet again on the same level.

 

[nards444]

I just did the math on maintenance and repair for a truck I have owned for 16 years and the numbers don稚 add up as you suggested..
I got free lifetime inspection on the purchase and it has only taken tires, brakes since brand new. Sorry but my finance charge is zero and there have been zero break downs.
Considering there is still a resale value worth more than than the cost of a years least at your 450 cost (using the lower due to year) but is actually most likely between the 2 and 3 year range due to condition and desire ability of a good diesel. Your numbers just don稚 compute as being better.
Now understand I used the maintenance cost based on 16 years not ten so this should have given your system an advantage but it doesn稚.

Now letç—´ talk mileage and cost per?
Want to figure out your actual cost per mile and compare it to real world numbers where people actually keep a vehicle that doesn稚 give them problems?
The real cost of ownership is actually in miles driven not years owned and ever lease I see has a mileage limit. For the ability to drive more miles you pay more keeping the cost yet again on the same level.

My numbers add up if your talking the averages, averages are 12-15k miles a year, if you are the average you have almost 200k miles on your vehicle in which case you should have more than one set of tires and some brakes. My math doesn't take into account the odds and eachs or the guy that is only driving 2-3k miles a year. Also your talking about a truck that you purchased in 2003 which means it probably didn't cost over 30k and 0% interest rates, which i am comparing trucks that for the most part have been 40-50k for the last 5 years and 0% interest rates have all but disappeared in the last few years and your paying 3-5% for now.

My equation works if you hold on to the vehicle for 7 -10 years only and drive the average amount of miles a year and are comparing like vehicles with like purchase prices and comparing stuff in the last 5-10 years not almost two decades ago. If you purchase something to drive for 20 years and a million miles renting is a terrible idea.

And cost per mile vs cost per year can be one in the same or relevant. But when you talk cost per mile your also factoring in MPG, insurance etc which makes it a different ball game, again we are talking purchase price only.

So while I see where you are coming from and it probably works for you, but when comparing two things they have to be the same or similar, of which you are not doing. If we both started fresh today and both went and bought like trucks with like usage, I guarantee I either match or beat you for the next ten years in terms of purchase price only. Again people arent keeping vehicles 20 years data supports that, so your situation is not the norm.

 

[coobie]

Lease insurance if you so choose to get it is like 300 bucks, often times its thrown in. I dont do down payments, doesn't make sense, as you total the truck tomorrow you lose that money, just gets rolled in, I only pay around 450-500 bucks, so really doesn't matter.

In the end the lease down payment is no different than a down payment when purchasing, you either put it down and if you dont it gets spread across the term, so its not new or extra money. The total lease amount is the same whether you do lease down payment or not.

You must be leasing cheap stripped down trucks with those payments of $450-$500 with no money down.Maybe I should redo my math then.When I looked into leasing with.$4,000-$5,000 down payments were still $600 plus per month on a 36 month lease.