Without a doubt, everyone needs time for relaxation and recuperation from the stresses and strains of the daily work grind. Lease drivers and owner/operators in the trucking industry tend to take very little planned time off. It seems more of a ‘catch as catch can.’ The idea of taking a two-week trip to the Mexican Rivera, Hawaii, Europe, or your Great Aunt Mary’s seems to be nothing more than a fleeting dream not based in reality.

This isn’t the way it needs to be! It just takes some planning and forethought to accomplish this. As owner-operators, it’s not the cost of the actual vacation, it’s the hidden costs that stop us in our tracks. Saving the necessary funds for the trip is the easy part. Being prepared for all those fixed costs that continue to stack up when the truck isn’t producing revenue, and the personal home expenses that still need to be paid regardless whether the truck is making money or not, is the root of this dilemma. Added to this, it takes a couple of weeks to get back into the cash flow groove upon your return to rolling down the highway.

With planning and discipline, by this time next year you can be prepared to take that long-desired extended holiday. First in developing your plan, you have to know what it is 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: lease or truck payments, cell and business phone, business insurance, base plate and other licenses, permits and taxes; accounting fees, health and disability insurance premiums, and your salary for driving the truck (your salary should cover all of your home personal expenses). By knowing these figures and calculating them from an annual total to a daily total (done by dividing your annual total by 365), you have accomplished the first step towards having the funds to take a real vacation.

Step two in the process is to determine the number of days you will be on vacation. Next, Step three, add 14 additional days to allow time to “get back into the cash flow groove” upon your return from holiday.

Step four, 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.

Step five, 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 home expenses. The funds needed for the vacation itself (plane tickets, hotel, etc.) is a completely separate savings plan.

Here’s an example of how this works.

Let’s say:

1. Your Annual Fixed costs are :………… $36,500
2. Your Annual Driver’s Salary is…….. $50,000
3. Total Annual Fixed Costs................ $86,500
4. Divide Annual Fixed Costs by ………… 365 Days
5. Fixed Cost per Day……………………….. $ 237

6. Number of days on Vacation + 14… 24 Days
   (10 days’ vacation + 14 “get back into the cash flow groove” days)
7. Multiply Total Vacation Days By Fixed Cost per Day ($237)
   $ 5,688 is the Vacation Cash Reserve needed
8. Add the Vacation Cash Reserve to the previous Total Annual Fixed Costs……… $86,500
9. The New Total Annual Fixed Costs including the Vacation Cash Reserve…. $92,188
10. Divide the New Annual Fixed Cost by… 365 Days
11. The New Fixed Cost per Day required… $ 253
12. The difference from the old Fixed Cost … $ (237)
    and the New Fixed Cost per Day………. $ 16 is what is needed to save per day to be able to take a paid vacation next year.

There are three very distinct areas of costs in trucking: Cost per Mile, Cost of Ownership (Fixed Costs), and Shipment Specific Costs. (Keep in mind I have purposely not included your Cost per Mile and Shipment Specific Costs figures here because they have no bearing on calculating the needs for your Vacation Reserve Account. We’re assuming the truck is parked during the duration of the vacation.)

If you are a lease-operator contracted to a trucking company, or an owner-operator running under your own authority using brokers or your own accounts, it is imperative you calculate the Vacation Reserve amount into your Fixed Costs to have the necessary funds for you to take that deserved vacation.

Keep in mind on a day-by-day basis; it equals pocket change to provide yourself a paid vacation. With a bit of planning and a little discipline you can create memories that don’t involve the truck.

Remember it’s your truck, your business.

For those who entered our contest last month: Thank you for the tremendous response. We didn’t have any winners in May. The correct answer to the questions:

1. What is a non-compete clause?
2. What is the most important question that should determine if you will even begin negotiations?

ANSWERS:

1. A non-compete clause can prohibit you from going to work for a competitor, or starting your own trucking company with your own authority.
2. Will you fax me a copy of your lease?

Contest: The first person to answer correctly the questions listed below by email to info@truckersbookstore.com will receive a copy of the book Gearing Up 4 Profit$, An Owner/Operator’s Guide to Load Profitability.

1. How many days beyond your actual vacation should you figure to calculate the correct amount for your Vacation Reserve Savings?
2. Name four expense categories (include at least one not listed in the article) that would be used in figuring your Cost of Ownership (Fixed Costs)?

For more information on this subject and other trucking business subjects go to www.truckersbookstore.com

THE HOME OF:

Driven 4 Profits An Owner/Operator’s Guide to Keeping More of the Money You Make.
©2002 Tim Brady & Esta Klatzkin, E.A.
ISBN 0972402608

Gearing Up 4 Profit$, An Owner/Operator’s Guide to Load Profitability. ©2005 Tim Brady
ISBN 0972402640

The HOTTEST new trucker's software
Load Profit Analy$i$ $oftware, This companion software to Gearing Up 4 Profit$ figures load profitabilty in a snap!
©2005 Write Up The Road Publishing & PCUNet, LLC
ISBN 0972402691

Quick & Simple Record Keeping for Owner/Operators
©2005 Tim Brady and Esta Klatzkin, E.A.
ISBN 0972402683

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