Fire Truck Help

Fire Truck Help

What fire truck payment can we afford?

No one wants to sign a new truck contract and then learn they can’t afford to make the payments.

It’s simple to calculate how much you can afford

Just begin with your revenues, or income.  How much do you normally get each year? Don’t include 1-time things like grants or money from loans or insurance proceeds.

Then, add up all the costs of running your department each year.  Include normal things like insurance, fuel, utilities, and repairs & maintenance but leave out things like loan payments or large repairs or unusual expenses.

Subtract the normal operating expenses from the normal revenue.  This is called your cash flow.

Then, subtract your current loan payments (if any) from your cash flow.

Your payment budget for your new fire truck would be 80% of the cash flow minus current payments.

Why 80%?

The reason for the 80% rule is to be conservative and will allow some wiggle room for unusual or emergency purchases if needed.