Trying to make a difficult decision

[canoetrpr]

TBN is where I come when it is time to make a difficult decision. This one is related to trucks and transportation.

The Mrs and I sat down and took a very keen look at our finances to try to see where we could cut down on expenses. It has become painfully clear month after month that we are spending a few hundred more than I am bringing in. Obviously this has got to stop. Not sure where it happened but bills have just kept adding up.

We are generally not frivolous purchasers of things. We don't tend to eat out. Heck we don't even have cable or satellite TV. Perhaps the biggest contributers to the bills we have vs. other families at our stage is the hobby farm - small herd of Galloway cattle, tractor and the rural lifestyle in general. But we are not willing to give that up as it is a way of life.

Adding up the records showed that we are spending a whopping amount of cash in vehicles and fuel. I have a 2009 Ford F-150 which I absolutely adore but it is costing me $875 per month in financing. My wife's van is paid for and has a lot of life left in it. I also work 50 km away (cost of rural living) so that is 100km trip to work. My F-150 is good on gas for a 1/2 ton truck but it still adds up to $600 per month in gas. So I am spending about $1500 in my vehicle alone not including maintenance etc.

It seems to be the only place we can realistically cut to balance the budget so to speak.

There is very little I need a truck for around here but when I do it is indispensable. Although I thought I would, I do not find my self hauling back stuff from auctions. The truck comes in handy when I need to make a trip to the dump for something. It was handy for me to take my bucket in to get a quick attach plate welded on and to pick up a heavy insulated dog house that a buddy built for me. A neighbor gave away 15 square bales because they were a year too old for her horses. Probably 1/2 a dozen times a year - you get the idea.

Other than that, it is my daily driver to work and a heck of a nice daily driver it is. A pleasure to drive on country roads in inclement weather. We do get some weather up here in the Toronto are and sometimes some not so well plowed roads.

I've done some research and found that I could sell the truck for about what I owe on it. Realistically, I don't see myself driving a little Honda Fit to work so I will step down to a small SUV like a Subaru Forester or so - about 50% more fuel efficient. It would cut down on what I pay a month by about $300. I could buy a used one about as old as my truck and get it paid off in about as much time as there is left to pay off my truck.

At the end of the day I estimate I would save about $500 a month.

Of course, I am going to be mighty dissapointed on those days when a truck could be very useful! I have found that I could rent a pick up for $110 for the weekend taxes in so that is always an option. I have pondered purchasing a used old pickup for the farm but I worry it won't get used much and will just decline in the weather. I find vehicles don't do well when they sit around and don't get used.

What do you guys think?

 

[Diamondpilot]

That is a tough one. Nothing like having a vehicle that is fully capable of everything you need and will last you a good long time being so new and a Ford.:thumbsup:

All joking aside you are spending more on 1 vehicle than I am on 3 vehicles. I respect you very much for saying the money coming in is not on par with the money going out. If more did as you are the state of our neighboring countries would be much better off.

If it were me I would not know what to do but I am in a different situation as you. I could not get by 1 single day without a truck.

Good luck on what ever you decide to do.

Chris

 

[B7510HSD]

Heck a couple of truck rentals would buy you a good used utility trailer for your dump and hauling needs if you get a vehicle with a hitch!! :thumbsup:

 

[Soundguy]

wow.. good luck too.

my only thought might to be to sell the truck and get out of the debt, and instead try to slip into something much more used but serviceable for the time being. say.. do a 3-5 yrs projection.. not something you will be in long term..

sonudguy

 

[Diamondpilot]

You know, the more I sit and think about it I think you need to keep the truck or perhaps get a cheaper truck but the Hobby Farm has to go. I know you love it but loving something does not pay the bills. My mechanic had a hobby farm for years with horses and such and he just in the last year had to give it up. He ended up giving away the livestock. It was just eating him alive. He sold the tractor and some of the toys, got a reasonable vehicle, V8 Mercury Mountaineer AWD, and now has his finances back in shape.

Sorry to hear you are going though such a rough time but I really think the Hobby Farm has to go. Its a Hobby, not a necessity. Good dependable transportation is more important at this point. You said the wifes van is paid off so that tells me it probably 6 years old or more. Repairs can get expensive and not having one dependable vehicle is asking for troubles.

Chris

 

[canoetrpr]

I should clarify a couple things just to add more perspective.

The hobby farm is really the rural lifestyle that my wife and I have chosen. Most of us here on TBN are in this boat. It would cost us a lot less to live in suburbia but that is not really an option for us. Our farm is our home. We have a 26 acre property with pastures and outbuildings. We decided to add the cattle this year as I have always wanted to start a herd. There have been some initial costs and hay this year is out of pocket but I think from this point on I will be close to breaking even on the cattle. Only possible since I'm paying the mortgage.

Our overall situation is not desperate at all. I make good money. Our property has appreciated substantially better than what a house in suburbia would have in the same time-frame. There are only so many rural properties within commuting distance of a major city after all.

My tractor and all related equipment is paid for and I have no consumer debt other than the truck. I have the mortgage on our home/farm.

Overall things are manageable but could be better given a good chunk of cash is currently being spent on the truck and my commute to work. Every few months, I get an award of some sort and I am able to generally catch up on any temporary use of a line of credit I have had to make to cover things in the short term.

Primarily, I want to get ahead of the curve here. I realize I could be more frugal and perhaps something used that I can pay for outright or get paid off within a year, which uses less fuel might be the thing to do.

My wife's van is 5 years old now with 200000 km. I'm not terribly concerned about something that might come up. My past experience with Hondas has been that they have been quite reliable. Of course as the miles rack up, there is always a chance.

 

[PoorMansCat]

I agree... the hobby farm needs to be drastically modded or disolved all together. It is probably the one thing you can re-coup some $$$ on.. If you get rid of the Ford, you won't gain anything other than losing the payment, which will have to be replaced with another payment. It appears as though the only equity available to you currently is the herd... so thats what you have to work with.. There is no equity in the truck... I guess IF you could sell it outright for what you owe, atleast you could then get out of the high payment and possibly buy a base model used 4-5 year old vehicle.
With that being said, if you don't mind me asking, how did you end up with a $800+ payment on a 1/2 ton truck??? And at how many months? Did you happen to be upside down on a trade in vehicle?

 

[powerstroke444e]

The new iron looks cool and is great once if your in a postion to own it. Takes a big man to put it out there like you have and I respect you for that. I took a dose of reality a few years ago and finally figured out that trucks will be junk when I am done with them weather I buy them new or used. Spend your money on things that are worth something when your done, like ground and equipment that makes money. Figuring out what you want and need it tuff. Wish you the best and like the idea of something cheaper and better on fuel. Same reason I drive a car for my office job and keep couple old trucks for work.

After reading your reply while I was posting I think you got it figured out and you are in a great position you added value and over the long haul you wont remember what you were driving to work but will have income comeing in when you are selling a few cows.

 

[Diamondpilot]

With that being said, if you don't mind me asking, how did you end up with a $800+ payment on a 1/2 ton truck??? And at how many months? Did you happen to be upside down on a trade in vehicle?

I was thinking the same thing???? My biggest payment ever was on my fully loaded 2006 F-350 4x4 Diesel with all the bells and whistles. It was a FX4 Lariat with every option that year down to the chrome tow hooks.

Back on the subject, I am not saying sell your home. Like you said places like yours are few and far between. Land is the only thing they are not making any more of so sooner or later when the economy turns around each and every one of us who owns property will see it appreciate.

Have you sat down and looked into the true cost of the herd and running the farm versus just having land? My uncle farms 4,000 acres and has 650 to 800 head at any one time and I know its tough for him to squeak out a dollar. The margins are tight and it takes just a little bad luck to put you in the hole.

Chris

 

[ultrarunner]

As others have said... either have to reduce expenses or find a way to increase income.

A couple of accountant questions... does the farm/truck generate any tax deductions?

Any chance the farm can generate income to offset expenses... boarding animals, selling livestock?

Any chance to lower your property tax bill?

The trailer is a great idea... I used one for years exclusively because it was much cheaper than buying a truck for a second vehicle.

A friend was able to retire his truck to weekend duty when he was able to ride share with someone working in town... save both fuel, wear and tear and insurance dropped since it was no longer his daily commute vehicle.

Your numbers may sound high, but they are Canadian Dollar based and fluctuate with the exchange rate.

 

[petes]

I have a few goals set for myself - one of which is to never make payments on anything but my house. So far (40 yrs old), so good. I drive a '96 Outback (160k mi) and my wife drives a '96 Honda Odyssey (150k mi). We bought both vehicles when they were about 10 years old with over 100k miles, meaning they were well down on the depreciation curve. Because we don't owe anything on them and don't have that much $ tied up in them, we don't need to carry full-coverage insurance, saving hundreds of dollars each a year.

I never wanted to own a truck and managed to get by until just recently with my Subaru wagons over the years that have done just fine pulling my 4x8 utility trailer, pulling my boat, pulling stumps (!!!), etc. I've yet to meet a Subaru that won't do well over 200,000 miles if reasonably cared for.

I do now (unfortunately) own a truck (3rd vehicle, '86 F-250 diesel), but only to tow the horse trailer and (now sold) cabover camper, and only paid $1000 for it.

My advice - get a cheap commuter car with a trailer hitch and a lightweight utility trailer (~1500lb capacity). If you're not hauling livestock, horses or heavy tractors it'll do just about everything else - hay, dump runs, etc.

Sounds like at your current expense burn rate on your truck, a 10 yr old Subaru and a trailer would be paid for in about 3 months, after that you're gaining ground even if you have to buy another one every 6 months (unlikely!)

 

[scoutcub]

I have to agree with petes.
The farm is obviously where you want to be in life so don't give it up unless you're forced to.
I would shop around for a good used forester (or other small suv), and pick up one of these inexpensive 4X8 or 5X10 trailers. You'll save on your vehicle payments, gas, and insurance.
And, it should put you on the plus side of income vs outgo, with some peace of mind as well.
However, I would also continue to look at the rest of the budget very closely and find some other cutbacks/modifications to improve you're debt/income ratio.

Best of Luck!

 

[B2320]

I vote to sell the truck, but I don't know that a Subaru will fill your truck void. I struggle(d) with the same thing. Currently I drive a late 90s suburban (beater with a heater) and suffer gas pains in my daily commute, but I get a warm feeling inside knowing the Burban is paid off as I pump $100+ dollars into the tank. I consider repairs a monthly payment (I'm sure Pete does as well) and do many of the repairs myself, but they never add up to what a years worth of payments would be. I do get new truck envy:drool: from time-to-time, but a trip to the online payment calculator always cures me. When I need to tow there is no substitute for a truck and the Burban fills the need, a new truck falls into fill the want category. Also like you, the wife drives a lake model Japanese van with decent gas mileage and great reliability. Would a late model (10 years or newer) mid-size truck decrease the monthly payment, save fuel, and still serve the farm? Good luck.

 

[jimmyj]

Hey buddy long time no talk! I remember when you got that truck. Get a car and a trailer and in time, a cheap truck. My pickup is only used occasionally but it's paid for and probably would only cost about $3500 if I bought it now. High miles, many dents and dings, but mechanically sound. As a commuter the dumbest thing I ever have done is lose money on vehicles. Now I view them as simply throw aways and want to spend as little per year as possible.

My wife and I moved to the country 15 years ago. Sure we had a mortgage but we also had savings. Slowly, our rural lifestyle caught up with us. Too many toys, too many animals, too many too many's. We suddenly found ourselves going broke. I was driving a new truck 75km (50miles) each way to work every day and between the $500 a month in fuel, plus payments and insurance plus my hobby farm costs were well over $500 a month just for feed. We were building debt and not saving. We cut down on the number of animals on the farm (got rid of the cows, llamas, alpacas and went from about 15 sheep to 5, cut back on the # of chickens, etc). I got a cheap used honda for $2500 and drove it for 3 years and it was just what we needed. Over the next while we paid off the debts and just this last year got my wife a new car (although an economical one).

You gotta get rid of the truck for now.

Good luck!

 

[racolton]

When my wife and I were living in the country, we had to swap vehicles to cut down on how much gas I was burning through. She got the Jeep (around 15 mpg) for heading towards a local small town for occasional shopping, and I got her Intrepid (27 mpg) for my daily commute. Perhaps you and your wife can do the same?

 

[CompactTractorFan]

I think the trailer is a great idea. If your spending $1500 a month on your truck you could get a trailer like this to tow behind a Subaru Forester for less then what you spend in a month on your truck. :thumbsup: http://www.bigtextrailers.com/trailers/images/trailers/15aa.JPG

 

[Bikewanderer]

Do you listen to Dave Ramsey? If you don't - start. Download itunes and you can get his podcasts free, or get his book. His program is one of the best things I have ever done to improve my lifestyle.

Anyway, here's my advice: Keep the cattle for now and sell when you get the most money for them. Sell the truck and get a cheap one. My pickup cost me $3100. It's a diesel dually with a flatbed, perfect farm truck. Get an old truck and a cheap car if you need a daily driver.

For a long term approach, look at hiring yourself and your tractor out next summer for brush hogging or misc. farm related work for extra income. Use it this winter for snow removal in town if you can. You can rent the pasture out for cattle. I just got off the phone with a guy that wants to pay me $10/head to rent pasture and he maintains the pasture and fences. I rent out a few acres to a gal with a horse for $125/month. Point is, you can keep the lifestyle without all the work. It's not a lot of money but it helps.

The only trick is to constantly work on reducing expenses and increasing income.

 

[Marlowe]

I have an absolutely beautiful truck out in the drive. It's got a few dings and a bit of rust here and there, but no payment. Even though it's twelve years old now it still cranks every time and takes me wherever I need to go. That's one of the nice things about a truck built in the last twenty years or so. They last a long, long time. They all use gas but it's so hard to get something that uses enough less gas to justify not having a truck that I just buy a bit more gas. Those new ones sure are pretty though, as long as someone else gets the payment book.

 

[blueriver]

Sell the truck to clear the loan ... buy a less expensive one for the farm. Diversify ... find a way to generate income from the acerage ... sell hay, produce a commodity that folks will buy ... eggs, beef, pork ... a large Garden ... vegtables sell ... just my thoughts.

 

[Soundguy]

perhaps rent out the land? agree on sell the new to clear the loan and get a temp ( few years ) farm truck for dirt cheap and no payments..

soundguy