My Dad Keeps Making Purchases For The Tax Write Off

Scott's in San Francisco hi Scott welcome to the Dave Ramsey show sure what's up I got a question for you so my dad has a started a family so I'm trying to take over the business and kind of make things better he wants to buy trucks and trailers because he starts panicking because it's really close to crack season and he seems to think that's the best wing off that Vietnam you know for taxes rather than saving money or we've never been able to save his home he's under business over 25 years and he's never been able to save really mm-hmm well that's why um you know is because he keeps spending money on debt to buy stuff that he didn't even need to say on taxes all right the the math that he's doing is unbelievably faulty okay so let me give you an example what would be a typical purchase it would be the size of the equipment $50,000 item 100,000 right out so if he buys a $50,000 item in years past he had to he could not write that all off in one year he had to write it off over five years so it's a $10,000 a year right off and if he has a $10,000 you're right off you don't get to say it doesn't save you $10,000 on your tax bill okay instead what it does is it would save you about $2,000 on your tax bill now what we're saying is is that he borrowed $50,000 to save $2,000 a year on his tax bill for five years yeah the math is really really faulty there and so what happens is entrepreneurs either don't think this through and or use this as a rationalization to buy toys inside their business that they really can't afford so you guys have to quit buying equipment until you can pay cash for it and then and then you're going to buy older used equipment only equipment you need to do the job we don't buy anything here in our office if we don't have to have it to you the job done we don't buy anything in the tax write-off the way he explained it to me is he has to have because it has to be moved because it has to be safe he doesn't want to buy something that's all of us gonna break down when it won't be safe into it the first time and it's out for 10 to 15 days he just lost a lot of money that's the way he explains to me and I told him telling you're telling me all two-year-old and 3-year old tractors aren't safe and break down all the time again asinine it's absolutely asinine that's just ridiculous okay and here's the other thing it's kind of a dr. Phil moment he's worked his butt off all these years he has no money and dr. Phil would say how's that working for you it's not you know so how's that theory of yours working out here it's not working out and so I don't know how to tell you to tell your dad what today he's probably not listening to you and he's probably not listen to me then if you're running it then you get to make the decision and you and I have just decided you can I don't want anybody to be unsafe and I don't want to have equipment I've got probably a million and a half dollars in equipment sitting here within 15 feet of me right now while we're doing this show I can't have that equipment going down the show would go down that would cost me a lot of money just like that but but we also don't buy equipment we don't need and then we make a decision whether we're going to buy new and we certainly pay cash for it and whether it's cameras or computer systems and in your case it's actually heavy equipment we don't own any heavy equipment a couple pickup trucks to do delivery and stuff around here and one bus that keeps running us between buildings but other than that we don't have any big stuff like that but still I can't have that bus breaking down all the time but I put that bus used Donald Harris drives our bus every day runs us back and forth between our little shuttle between our things and it's it was a you shuttle and I paid a tenth for it when a new one cost and it's run I mean it's broken down a couple times and we rented a shuttle for that day when it broke down kept kept moving I'll put it in the shop and fixed it but I mean for that little bit of inconvenience it's safe and it's been reliable enough to get the job done and not shut us down and so that's a minor example but it's filling in the same metaphor and so yeah you can you can make this work by use to pay cash for your equipment otherwise all you do is work for nothing all you do is end up with no money for all your work because and the you know the heavy equipment dealer gets all your money and that just doesn't work for me I don't live that way

Channel: The Ramsey Show - Highlights

Views: 62,179

Keywords: the dave ramsey show, budget money debt cash, real estate, insurance, how to make money, dave ramsey, save, credit card, compound interest, buying house, buy, snowball, My Dad Keeps Making Purchases For The Tax Write Off, tax write off, tax write offs explained, tax write offs for small business, tax write offs, tax write offs for self employed

Id: Je50aHBbI94

Length: 4min 58sec (298 seconds)

Published: Wed Oct 24 2018